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137
Financial
Statements
& Others
Gamuda Berhad (29579-T)
Annual Report 2013
2. Summary of significant accounting policies (cont’d.)
2.15 Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets, other than construction contract assets, property
development costs, deferred tax assets and inventories, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, the Group makes an estimate of
the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For
the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in
respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated
to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or
groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the
revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other
comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. A previously recognised impairment loss
is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is
recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is
treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the weighted average cost method. The cost of raw materials includes the cost of
purchase and other direct charges. The cost of finished goods and work-in-progress comprise rawmaterials, direct
labour, other direct costs and appropriate proportions of production overheads. The cost of unsold properties
comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common
costs.
Net realisable value represents the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
Notes to the Financial Statements
31 July 2013