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55 54 Best World International Limited
Annual Report 2011
Best World International Limited
Annual Report 2011
2. Summary of Signifcant Accounting Policies (Cont’d)
Goodwill (Cont’d)
For the purpose of impairment testing and since the acquisition date of the business combination, goodwill
is allocated to each cash-generating unit, or groups of cash-generating units that are expected to beneft
from the synergies of the combination, irrespective of whether other assets or liabilities of the
acquiree were assigned to those units or groups of units. Each unit or group of units to which the goodwill
is so allocated represent the lowest level within the entity at which the goodwill is monitored for internal
management purposes and is not larger than a segment.
Impairment of Non-Financial Assets
Irrespective of whether there is any indication of impairment, an annual impairment test is performed
at the same time every year on an intangible asset with an indefnite useful life or an intangible asset
not yet available for use. The carrying amount of other non-fnancial assets is reviewed at each end of the
reporting year for indications of impairment and where an asset is impaired, it is written down through
proft or loss to its estimated recoverable amount. The impairment loss is the excess of the carrying
amount over the recoverable amount and is recognised in proft or loss. The recoverable amount of
an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. In
assessing value in use, the estimated future cash fows are discounted to their present value using a pre-
tax discount rate that refects current market assessments of the time value of money and the risks
specifc to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifable cash fows ( cash-generating units). At each end of the reporting
year non-fnancial assets other than goodwill with impairment loss recognised in prior periods are
assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that
the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Inventories are measured at the lower of cost (frst in frst out method ) and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale. A write down on cost is made for where
the cost is not recoverable or if the selling prices have declined. Cost includes all costs of purchase, costs
of conversion and other costs incurred in bringing the inventories to their present location and condition.
2. Summary of Signifcant Accounting Policies (Cont’d)
Financial Assets
Initial recognition, measurement and derecognition:
A fnancial asset is recognised on the statement of fnancial position when, and only when, the entity
becomes a party to the contractual provisions of the instrument. The initial recognition of fnancial assets
is at fair value normally represented by the transaction price. The transaction price for fnancial asset not
classifed at fair value through proft or loss includes the transaction costs that are directly attributable to
the acquisition or issue of the fnancial asset. Transaction costs incurred on the acquisition or issue of
fnancial assets classifed at fair value through proft or loss are expensed immediately. The transactions
are recorded at the trade date.
Irrespective of the legal form of the transactions performed, fnancial assets are derecognised when they
pass the “substance over form” based on the derecognition test prescribed by FRS 39 relating to the
transfer of risks and rewards of ownership and the transfer of control.
Subsequent measurement:
Subsequent measurement based on the classifcation of the fnancial assets in one of the following four
categories under FRS 39 is as follows:
1. Financial assets at fair value through proft or loss: As at end of the reporting year date there were no
fnancial asset classifed in this category.
2. Loans and receivables: Loans and receivables are non-derivative fnancial assets with fxed or
determinable payments that are not quoted in an active market. Assets that are for sale immediately
or in the near term are not classifed in this category. These assets are carried at amortised costs using
the effective interest method (except that short-duration receivables with no stated interest rate are
normally measured at original invoice amount unless the effect of imputing interest would be
signifcant ) minus any reduction (directly or through the use of an allowance account) for impairment
or uncollectibility. Impairment charges are provided only when there is objective evidence that an
impairment loss has been incurred as a result of one or more events that occurred after the initial
recognition of the asset ( a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash fows of the fnancial asset or group of fnancial assets that can be reliably estimated. The
methodology ensures that an impairment loss is not recognised on the initial recognition of an asset.
Losses expected as a result of future events, no matter how likely, are not recognised. For impairment,
the carrying amount of the asset is reduced through use of an allowance account. The amount of the
loss is recognised in proft or loss. An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was recognised. Typically the trade and other
receivables are classifed in this category.
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2011