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Notes to the Financial Statements
For the fnancial year ended 31 December 2012
3. Summary of significant accounting policies (cont’d)
3.8 Biological assets (cont’d)
Oil palm trees have an average life that ranges from 20 to 25 years; with the frst 3 to 4 years as immature and the remaining years
as mature.
Rubber trees have an average life that ranges from 20 to 25 years with frst 5 to 6 years as immature and the remaining years as mature.
Sugar cane is ready for harvest in 12 months and can be harvested for an average of 4 years.
3.9 Plasma receivables
Plasma receivables represent the accumulated costs to develop plasma plantations which are currently being fnanced by banks
and self-fnanced by certain subsidiaries. Upon obtaining fnancing from the bank, the said advances will be offset against the
corresponding funds received from rural cooperatives unit (Koperasi Unit Desa or the “KUD”). For certain plasma plantations, the
loans obtained from the bank are under the related subsidiaries’ (acting as nucleus companies) credit facility. When the development
of plasma plantation is substantially completed and ready to be transferred or handed-over to plasma farmers, the corresponding
investment credit from the bank is also transferred to the plasma farmers.
Gain or loss resulting from the difference between the carrying value of the plasma receivables and the corresponding investment
credit transferred to the plasma farmers is refected in the consolidated statement of comprehensive income for the year.
An allowance for uncollectible plasma receivables is also provided based on the excess of accumulated development costs over
the bank or Group’s funding or amounts agreed by the KUD.
3.10 Intangible assets
(a) Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units that are expected to beneft from the synergies of the combination, irrespective
of whether other assets or liabilities of the acquire are assigned to those units.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an
indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable
amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the consolidated
statement of comprehensive income. Impairment losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining
the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative
fair values of the operations disposed of and the portion of the cash-generating unit retained.
Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2005 are treated
as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and
translated in accordance with the accounting policy set out in Note 3.6.
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