Page 90 - SAR141018_Forterra AR 2013

FORTERRA
ANNUAL REPORT 2013
NOTES TO THE
FINANCIAL STATEMENTS
88
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Impairment (Continued)
(i) Non-derivative financial assets (Continued)
Loans and receivables (Continued)
In assessing collective impairment, the Group uses historical trends of the probability
of default, the timing of recoveries and the amount of loss incurred, adjusted for
management’s judgement as to whether current economic and credit conditions
are such that the actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount and the present value
of the estimated future cash flows, discounted at the asset’s original effective
interest rate. Losses are recognised in profit or loss and reflected in an allowance
account against loans and receivables. Interest on the impaired asset continues to
be recognised. When a subsequent event (e.g. repayment by a debtor) causes the
amount of impairment loss to decrease, the decrease in impairment loss is reversed
through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than investment
properties, are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated. An impairment loss is recognised if the carrying amount of an
asset or its related cash-generating unit (CGU) exceeds its estimated recoverable
amount.
The recoverable amount of an asset or CGU is the greater of its value in use and
its fair value less costs to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the
asset or CGU. For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of
other assets or CGU.