Accounting Business Reporting for Decision Making

CHAPTER 5 Balance sheet 191

An extract of the notes to the accounts from the non-current assets section of JB  Hi-Fi Ltd’s 2015

financial statements is provided in figure 5.14. JB Hi-Fi Ltd records all classes of its plant and equip-

ment at cost. It is not uncommon for entities to measure the property, plant and equipment at cost and

disclose the fair value, particularly of property, in the notes to the accounts. In 2015, JB Hi-Fi deter-

mined that some of its plant and equipment was impaired. Accordingly, the plant and equipment was

written down via an impairment charge of $1 119 000). Goodwill is recorded at cost. It is not required

to be amortised on an annual basis. Instead, entities must determine on at least an annual basis whether

the goodwill value is impaired. If it is impaired, then the goodwill is written down, with the impair-

ment amount charged as an expense in the statement of profit or loss. Goodwill cannot be revalued

upwards. JB Hi-Fi Ltd did not write down any of its goodwill in 2015. In previous years it has done so.

In 2011, JB Hi-Fi Ltd determined that its goodwill associated with the acquisition of Clive Anthonys

was impaired, resulting in the goodwill being written down by $4 564 000 and an expense, impairment

charge, recorded. Note 14(a) identifies the goodwill associated with JB Hi-Fi Ltd’s business acquisi-

tions and details the assumptions made in assessing the recoverable amount. JB Hi-Fi Ltd measures its

identifiable intangible assets (brand names, location premiums and management rights to profit share)

at cost. Identifiable intangible assets can only be upwardly revalued if their fair value can be determined

by reference to an active and liquid market. JB Hi-Fi Ltd has determined that its intangible assets have

an indefinite life and, hence, the assets are not amortised. As required by an accounting standard, these

intangible assets with an indefinite useful life are tested for impairment annually and whenever indi-

cators suggest they may be impaired. The cost of identifiable intangible assets with finite lives must be

amortised over their useful lives.

Consolidated

Plant and

equipment

$’000

Leasehold

improvements

$’000

Total

$’000

12. NON-CURRENT ASSETS — PLANT AND EQUIPMENT
    Year ended 30 June 2015
    Opening net book amount
    Exchange differences
    Additions
    Disposals
    Impairment charge recognised in profit and loss
    Depreciation charge

117 950

(394

25 899

(4 530

(1 119

(22 987

)

)

)

)

63 614

(218

16 567

(2 437

—

(16 137

)

)

)

181 564

(612

42 466

(6 967

(1 119

(39 124

)

)

)

)

Closing net book amount 114 819 61 389 176 208

At 30 June 2015

Cost

Accumulated depreciation

240 819

(126 000 )

143 691

(82 302 )

384 510

(208 302 )

Net book amount 114 819 61 389 176 208

Goodwill

$’000

Brandnames

$’000

Location

premises

$’000

Rights to

profit share

$’000

Total

$’000

14. NON-CURRENT ASSETS — INTANGIBLE ASSETS
    Year ended 30 June 2015
    Opening net book amount
    Exchange differences
    Additions

36 194

(677

—

)

43 094

—

—

2 388

—

—

3 542

—

—

85 218

(677

—

)

Closing net book amount 35 517 43 094 2 388 3 542 84 541

FIGU R E 5.14 Extract of JB Hi-Fi Ltd 2015 notes to the accounts — non-current assets

Source: JB Hi-Fi Ltd 2015, preliminary final report, pp. 78–80.