89 / 166
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.
Deferred taxation is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the statement of
financial position date. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred taxation is charged to the
statement of profit or loss except to the extent that it relates to a transaction that is recognised directly in equity, or a business combination
that is an acquisition. The effects on deferred taxation of any changes in tax rates is recognised in the statement of profit or loss, except to the
extent that it relates to items previously charged or credited directly to equity.
A deferred taxation asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated
unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
85
Annual integrated report 2017
Bid Corporation Limited