Financial Report Template Page 30
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80NOTES TO THE FINANCIAL STATEMENTS
(CONT)
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT.
revaluation decrease in accordance with that other Standard.
After having taken all possible measures of recovery, if
Where it is not possible to estimate the recoverable amount of an
management establishes that the carrying amount cannot be
individual asset, the Group estimates the recoverable amount of
recovered by any means, at that point the written-off amounts
the cash-generating unit to which the asset belongs.
are charged to the allowance account or the carrying amount of
Impairment testing is performed annually for goodwill, intangible
impaired financial assets is reduced directly if no impairment
assets with indefinite lives and intangible assets not yet available
amount was previously recognised in the allowance account.
for use.
When the terms of financial assets that would otherwise have
(k) Investments in Associates
been past due or impaired have been renegotiated, the Group
recognises the impairment for such financial assets by taking
Associates are companies in which the Group has significant
into account the original terms as if the terms have not been
influence through holding, directly or indirectly, 20% or more of
renegotiated so that the loss events that have occurred are
the voting power of the Group. Investments in associates are
duly considered.
accounted for in the consolidated financial statements by
applying the equity method of accounting, whereby the
Financial Guarantees
investment is initially recognised at cost (including transaction
Where material, financial guarantees issued that require the
costs) and adjusted thereafter for the post-acquisition change in
issuer to make specified payments to reimburse the holder for a
the Group’s share of the profit or loss of the associate company.
loss it incurs because a specified debtor fails to make payment
In addition, the Group’s share of the profit or loss of the
when due, are recognised as a financial liability at fair value on
associate is included in the Group’s profit or loss.
initial recognition. Subsequently, the liability is measured at the
Profits and losses resulting from transactions between the Group
higher of the best estimate of the expenditure required to settle
and the associate are eliminated to the extent of the Group’s
the present obligation at the reporting date and the amount
interest in the associate.
recognised, less cumulative amortisation.
When the Group’s share of losses in an associate equals or
The fair value of financial guarantee contracts has been assessed
exceeds its interest in the associate, the Group offsets the losses
using a probability-weighted discounted cash flow approach.
against other receivables from the associate. When the associate
The probability has been based on:
subsequently makes profits, the Group will resume recognising its
• the likelihood of the guaranteed party defaulting during the
share of those profits once its share of the profits equals the share
next reporting period;
of the losses not recognised.
• the proportion of the exposure that is not expected to be
(l) Interests in Joint Arrangements
recovered due to the guaranteed party defaulting; and
The Group’s share of the assets, liabilities, revenue and expenses
• the maximum loss exposure if the guaranteed party were
of jointly controlled operations have been included in the
to default.
appropriate line items of the consolidated financial statements.
Derecognition
The Group’s interests in joint venture entities are recorded using
Financial assets are derecognised when the contractual rights to
the equity method of accounting in the consolidated financial
receipt of cash flows expire or the asset is transferred to another
statements.
party whereby the entity no longer has any significant continuing
Where the Group contributes assets to the joint venture or if the
involvement in the risks and benefits associated with the asset.
Group purchases assets from the joint venture, only the portion of
Financial liabilities are derecognised when the related obligations
the gain or loss that is not attributable to the Group’s share of the
are discharged, cancelled or have expired. The difference between
joint venture shall be recognised. The Group recognises the full
the carrying amount of the financial liability extinguished or
amount of any loss when the contribution results in a reduction in
transferred to another party and the fair value of consideration
the net realisable value of current assets or an impairment loss.
paid, including the transfer of non-cash assets or liabilities
assumed, is recognised in profit or loss.
(m) Intangibles Other than Goodwill
(j) Impairment of Assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
At the end of each reporting period, the Group assesses whether
business combination is their fair value at the date of acquisition.
there is any indication that an asset may be impaired. The
Following initial recognition, intangible assets are carried at cost
assessment will include the consideration of external and internal
less any accumulated amortisation and accumulated impairment
sources of information, including dividends received from
losses. Internally generated intangible assets, excluding
subsidiaries, associates or joint ventures deemed to be out of
capitalised development costs, are not capitalised and
pre-acquisition profits. If such an indication exists, an impairment
expenditure is reflected in the profit and loss for the period in
test is carried out on the asset by comparing the recoverable
which the expenditure is incurred.
amount of the asset, being the higher of the asset’s fair value less
costs of disposal and value in use, to the asset’s carrying amount.
The Transformation project costs and Erin Brockovich costs are
Any excess of the asset’s carrying amount over its recoverable
capitalised only to the extent that they will deliver future
amount is recognised immediately in profit or loss, unless the asset
economic benefits and these benefits can be measured reliably.
is carried at a revalued amount in accordance with another
Standard (eg in accordance with the revaluation model in AASB
116). Any impairment loss of a revalued asset is treated as a
SHINE CORPORATE LTD | FINANCIAL REPORT | 2015
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