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INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
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For the financial year ended 31 December 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.10 Intangible assets (cont’d)
(b)
Other intangible assets (cont’d)
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually,
or more frequently if the events and circumstances indicate that the carrying value may be impaired either
individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an
intangible asset with an indefinite life is reviewed annually to determine whether the useful life assessment
continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective
basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the profit or loss when the
asset is de-recognised.
(c)
Research and development costs
Research costs are expensed as incurred. Deferred development costs arising from development expenditures
on an individual project are recognised as an intangible asset when the Group can demonstrate the technical
feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete
and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of
resources to complete and the ability to measure reliably the expenditure during the development.
Following initial recognition of the development costs as an intangible asset, it is carried at cost less accumulated
amortisation and any accumulated losses. Amortisation of the intangible asset begins when development
is complete and the asset is available for use. Deferred development costs have a finite useful life and are
amortised over the period of expected sales from the related project on a straight line basis.
2.11 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the
asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGUs”) fair value less costs of
disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset
or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
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. In determining fair value less costs of disposal, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately
for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations
generally cover a period of ten years. For longer periods, a long term growth rate is calculated and applied to projected
future cash flows after the tenth year.
Impairment losses of continuing operations 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.
