ANNUAL REPORT
2016
.67
NOTES TO THE
FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION (CONT’D)
2A.
Significant accounting policies (cont’d)
Impairment of non-financial assets
Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same
time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use.
The carrying amount of other non-financial assets is reviewed at each end of the reporting year for indications of
impairment and where an asset is impaired, it is written down through profit or loss to its estimated recoverable
amount. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in
profit or loss. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs
of disposal and its value in use. When the fair value less costs of disposal method is used, any available recent market
transactions are taken into consideration. When the value in use method is adopted, in assessing the 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. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). At each end of the reporting year non-financial assets other than goodwill with impairment loss
recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only
to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been measured,
net of depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Automobiles and watches held for sale are measured at the lower of cost (specific identification method) and net
realisable value. Inventories other than automobiles and watches are measured at the lower of cost (weighted
average method) and net realisable value. Net realisable value is 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. A write down
on cost is made where the cost is not recoverable or if the selling prices have declined. Cost includes all costs of
purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and
condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of
overheads based on normal operating capacity.
Financial assets
Initial recognition, measurement and derecognition:
A financial asset is recognised on the statement of financial position when, and only when, the entity becomes a
party to the contractual provisions of the instrument. The initial recognition of financial assets is at fair value normally
represented by the transaction price. The transaction price for financial asset not classified at fair value through
profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial
asset. Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit
or loss are expensed immediately. The transactions are recorded at the trade date.
