APM AUTOMOTIVE HOLDINGS BERHAD
60
NOTES TO THE
FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(i)
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits placed with licensed banks.
For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank
overdrafts and pledged deposits.
(j)
Impairment
(i)
Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss,
investment in subsidiaries, investment in joint ventures and investment in associates) are assessed at
each reporting date whether there is any objective evidence of impairment as a result of one or more
events having an impact on the estimated future cash flows of the asset. Losses expected as a result
of future events, no matter how likely, are not recognised. If any such objective evidence exists, then
the impairment loss of the financial asset is estimated.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss,
the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed
what the carrying amount would have been had the impairment not been recognised at the date the
impairment is reversed. The amount of the reversal is recognised in profit or loss.
(ii) Other assets
The carrying amounts of other assets (except for inventories, investment properties measured at
fair value and deferred tax asset and non-current asset classified as held for sale) are reviewed at
the end of each reporting period 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 useful lives or that are not yet available for use, the recoverable amount is
estimated each period at the same time.
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 cash-generating units. Subject to an operating segment ceiling test, for the
purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated
are aggregated so that the level at which impairment testing is performed reflects the lowest level
at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group
of cash-generating units that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and
its fair value less costs of disposal. 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 or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related 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
cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the
other assets in the cash-generating unit (groups of cash-generating units) on a
pro rata
basis.
