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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
Annual Report 2011 /
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Significant accounting policies
(continued)
(l) Impairment of assets
(continued)
(ii)
Impairment of other assets
Internal and external sources of information are reviewed at each balance sheet date to identify
indications that the following assets may be impaired or, except in the case of goodwill, an
impairment loss previously recognised no longer exists or may have decreased:
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property, plant and equipment;
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investment properties;
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construction in progress;
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lease prepayments;
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goodwill;
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other intangible assets;
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investments in subsidiaries; and
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other investments stated at cost.
If any such indication exists, the asset’s recoverable amount is estimated. In addition, for
goodwill, intangible assets that are not yet available for use and intangible assets that have
indefinite useful lives, the recoverable amount is estimated annually whether or not there is any
indication of impairment.
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Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs to sell and
value in use. 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 time value of money and the risks specific to the asset. Where an asset
does not generate cash inflows largely independent of those from other assets, the
recoverable amount is determined for the smallest group of assets that generates cash
inflows independently (i.e. a cash-generating unit).
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Recognition of impairment losses
An impairment loss is recognised in the consolidated income statement if the carrying
amount of an asset, or the cash-generating unit to which it belongs, exceeds its
recoverable amount. 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 (or group of units) and then, to reduce the carrying amount of the other
assets in the unit (or group of units) on a pro rata basis, except that the carrying value of
an asset will not be reduced below its individual fair value less costs to sell, or value in
use, if determinable.