Notes tothe financial statements For the financial year ended 31 December 2023 3. Significant accounting estimates and judgements (cont’d) 3.2 Key sources of estimation uncertainty (cont’d) (a) Allowance for ECL of plasma receivables (cont’d) The Group measures the cash flows expected to receive from each plasma project based on the estimated revenues from the plasma plantations deducted with the costs of sales, principal and interest payments to the bank. The key inputs applied for this estimation are the selling price of FFB, production costs, production yield for each planting year of the plasma plantations and inflation rate. These provisions are re-evaluated and adjusted as additional information is received at each reporting date. The gross carrying amount of the Group’s plasma receivables before the allowance for ECL and the adjustments of EIR amortisation as at 31 December 2023 is Rp2,388.5 billion (2022: Rp2,304.4 billion). Further details are disclosed in Notes 32(a) and 35(d). (b) Goodwill impairment Application of acquisition method requires extensive use of accounting estimates to allocate the purchase price to the fair market values of the assets and liabilities acquired, including intangible assets. Certain business acquisitions of the Group have resulted in goodwill, which is not amortised but subject to impairment testing, and whenever circumstances indicate that the carrying amount of the CGU where the goodwill was allocated into may be impaired. Determining the fair values of biological assets, property, plant and equipment, and other non-current assets of the acquirees at the date of business combination, requires the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, requires the Group to make estimates and assumptions that can materially affect its consolidated financial information. Future events could cause the Group to conclude that the assets are impaired. The preparation of estimated future cash flows involves significant estimations. While the Group believes that its assumptions are appropriate and reasonable, significant changes in its assumptions may materially affect its assessment of recoverable amounts and may lead to impairment charge in the future. Impairment review is performed when certain impairment indication is present. In the case of goodwill, such assets are subject to annual impairment test and whenever there is an indication that such asset may be impaired. Management has to use its judgement in estimating the recoverable amount. During the year, the Group recorded an impairment loss of Rp6.1 billion (2022: Rp126.8 billion) to impair the goodwill allocated to a CGU (2022: five CGUs) as the recoverable amount was lower than the carrying amount and net assets of the CGU. The carrying amount of the Group’s goodwill as at 31 December 2023 is Rp3,078.5 billion (2022: Rp3,084.6 billion). Further details are disclosed in Note 16. (c) Impairment of property, plant and equipment The Group identified the existence of impairment indicators on certain rubber bearer plants upon consideration of the market environment, conditions of the rubber plantations, production yield and the outlook of these plantation estates and determined the recoverable amount based on fair value less cost to sell, using discounted cash flow method. During the year, the Group recorded an impairment loss of Rp183.4 billion (2022: Rp157.4 billion) to reduce the carrying amount of certain rubber bearer plants to their estimated recoverable amounts. For the remaining rubber bearer plants, management concluded that the recoverable amount was higher than their carrying amounts and hence no impairment loss was required. This was recognised in the statement of comprehensive income under other operating expenses. The net carrying amount of the Group’s property, plant and equipment as at 31 December 2023 is disclosed in Note 14. 94 GROUP OVERVIEW OPERATION AND FINANCIAL REVIEW SUSTAINABILITY & GOVERNANCE FINANCIALS OTHER INFORMATION Indofood Agri Resources Ltd
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