Group Overview Operation and Financial Review Financials Other Information Sustainability and Governance Indofood Agri Resources Ltd. 92 Notes to the financial statements For the financial year ended 31 December 2025 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 calculates lifetime ECL based on the expected cash shortfalls, discounted at an approximation of the original effective interest rate (“EIR”). A cash shortfall is the difference between the cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive. 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 2025 is Rp1,280.0 billion (2024: Rp1,318.9 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 noncurrent 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. The carrying amount of the Group’s goodwill as at 31 December 2025 is Rp3,078.5 billion (2024: Rp3,078.5 billion). Further details are disclosed in Note 16.
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