Home' Nufarm Annual Report : Nufarm Annual Report 2015 Contents 3. Significant accounting policies (continued)
(h) Impairment (continued)
(i) Non-derivative financial assets (continued)
Objective evidence of impairment includes default or delinquency by a debtor, indications that a debtor will enter bankruptcy,
and, in the case of an investment in an equity security, a significant or prolonged decline in its fair value.
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 estimated future cash flows discounted at the original effective interest rate.
An impairment loss on an available-for-sale financial asset is recognised by reclassifying the losses accumulated in the fair
value reserve in equity to profit and loss. The cumulative loss that is reclassified from equity to profit and loss is the difference
between the acquisition cost and the current fair value less any impairment loss previously recognised in profit and loss.
If, in a subsequent period, the fair value of an impaired available-for-sale financial asset increases and the increase relates
to an event occurring after the impairment loss was recognised then the impairment loss is reversed, with the amount of
the reversal recognised in profit and loss.
(ii) Non-financial assets
The carrying amounts of the group’s non-financial assets, other than inventories and deferred tax assets, 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. For goodwill and intangible assets that have indefinite lives or that are not yet available
for use, the recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit 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. For the purpose of
impairment testing, assets 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 groups of assets (the ‘cash-generating unit’). The
goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units
that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then
to reduce the carrying amount of other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. 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
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately, and therefore
is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment
as a single asset when there is objective evidence that the investment in an associate may be impaired.
(i) Non-current assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through
sale rather than continuing use are classified as held for sale. Immediately before classification as held for sale, the assets, or
components of a disposal group, are remeasured in accordance with the group’s accounting policies. Thereafter generally the
assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment
loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro-rata basis,
except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which
continue to be measured in accordance with the group’s accounting policies.
NOTES TO THE FINANCIAL STATEMENTS continued
NUFARM LIMITED ANNUAL REPORT 2015 | 73
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