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When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence
that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the statement of profit or loss even
though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the statement of profit or loss is
the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the
income statement.
The recoverable amount of the group’s investments in held-to-maturity securities and receivables carried at amortised cost is calculated as
the present value of estimated future cash flows, discounted at the original effective interest rate (the effective interest rate is computed on
initial recognition of these financial assets). Receivables with a short duration are not discounted. Individually significant financial assets are
tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk
characteristics.
In respect of trade receivables, receivables that are assessed not to be impaired individually are subsequently assessed for impairment on
a collective basis. Objective evidence of impairment for a portfolio of receivables could include the group’s past experience of collecting
payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in
national or local economic conditions that correlate with default on receivables.
The recoverable amount of other assets is the greater of their fair value less costs to sell and their value-in-use. In assessing their 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.
An impairment loss in respect of a held-to-maturity security or receivable carried at amortised cost is reversed if the subsequent increase in
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through the statement
of profit or loss. If the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in the statement of profit or loss, the impairment loss is reversed, with the amount of
the reversal recognised in the statement of profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an impairment allowance account. When a trade receivable is considered
uncollectible, it is written off against the impairment allowance account. Subsequent recoveries of amounts previously written off are credited
against the allowance account. Changes in the carrying amount of the impairment allowance account are recognised in the statement of profit
or loss.
Impairment losses in respect of goodwill are not reversed.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the
loss has decreased or no longer exists. Impairment losses are reversed if there has been a change in the estimates used to determine the
recoverable amount.
Impairment losses are 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.
1.16 Taxation
Income taxation comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current taxation comprises tax payable calculated on the basis of the expected taxable income for the year, using the tax rates enacted or
substantially enacted at the reporting date, and any adjustment of tax payable for previous years.
Notes to the consolidated financial statements
for the year ended June 30
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| Bidcorp Limited Annual integrated report 2016