2019 Annual Report (^101)
more representative of the pattern of benefits
to be derived from the leased asset. Lease
incentives received are recognised in profit or
loss as an integral part of the aggregate net
lease payments made. Contingent rentals are
charged to profit or loss in the accounting
period in which they are incurred.
(k) Impairment of assets
(i) Impairment of financial assets, contract
assets and lease receivables
The Group recognises an allowance for
impairment on non-equity financial assets
held at FVOCI and AC, and also on contract
assets and lease receivables on an expected
credit loss basis. Increases and decreases in the
impairment allowance are recognised in profit
or loss. The expected credit losses are the
difference (on a present value basis) between
the contractual cash flows (or transaction
price) and the present value of cash flows
expected to be received based on the Group’s
past loss experience and reasonable and
supportable expectations, at the end of
the reporting period, about future credit
conditions.
For trade receivables, contract assets and lease
receivables, the Group recognises impairment
both individually and using provision matrices
based on the probability that the customer will
default during the lifetime of the asset, and
the loss that will be incurred given the default
(the lifetime expected loss). The Group defines
default as the customer being more than 90
days past due.
For all other financial assets that are not
purchased or originated credit-impaired,
the Group recognises impairment initially
based on the probability that the customer
or counterparty will default in the next 12
months unless there has been a significant
deterioration in credit quality, or the financial
asset becomes credit impaired in which case
the impairment allowance is increased to the
lifetime expected loss.
An asset is credit impaired when it has one or
more of the loss events described below:
■ significant financial difficulty of the
borrower or issuer;
■ a breach of contract, such as a default or
past due event;
■ the restructuring of a loan or advance by
the Group on terms that the Group would
not consider otherwise;
■ it is probable that the borrower will
enter bankruptcy or other financial
reorganisation; or
■ the disappearance of an active market for a
security because of financial difficulties.
In the case of purchased or originated
credit-impaired financial assets, the Group only
recognises the cumulative changes in lifetime
expected credit losses since initial recognition
as a loss allowance.
(ii) Impairment of other non-financial assets
Internal and external sources of information
are reviewed at the end of each reporting
period to identify indications that non-financial
assets, including property, plant and
equipment, right-of-use assets, intangible
assets and other long-term assets may be
impaired.
Goodwill is tested for impairment at least
annually. For the purposes of impairment
testing, goodwill is allocated to each cash
generating unit, or a group of cash generating
units, that is expected to benefit from the
synergies of the acquisition. Where impairment
testing is of a cash generating unit (or group
of units), an impairment loss is recognised
in profit or loss where the recoverable value
is less than the carrying value of the unit
(or group of units) and the impairment loss
recognised is allocated first to reduce the
carrying amount of any goodwill allocated to
the unit (or group of units).
Other assets are impaired and an impairment
loss is recognised in profit or loss where the
recoverable value of the asset is less than its
carrying amount, and reversed where there has
been a favourable change in the recoverable
amount. Impairment of goodwill is not
reversed.
The recoverable amount of an asset or group
of assets is the greater of its fair value less
costs of disposal and value in use. Value in use
coco
(coco)
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