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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
107
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Impairment of financial assets
A financial asset is impaired if its carrying amount is greater than its estimated recoverable amount.
The Group assesses at each reporting date whether there is objective evidence that a financial asset
or a group of financial assets is impaired. A provision for impairment is established when there is
objective evidence that the Group will not be able to collect all amounts due according to the original
terms of the receivables. Objective evidence that receivables are impaired includes observable data
that comes to the attention of the Group about the following events:
•
•
Significant financial difficulty of the debtor;
•
•
A breach of contract, such as default or delinquency in payments; or
•
•
It becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
The amount of the provision is the difference between the carrying amount and the recoverable
amount of the assets being the present value of expected cash flows discounted at the original
effective interest rate. The amount of the provision is recognised as a charge in the statement of
comprehensive income.
When a receivable is uncollectible, it is written off against the provision. Subsequent recoveries of
amounts previously written off are credited to the statement of comprehensive income.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Group are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial liability and
an equity instrument. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Refer to accounting policies on borrowings and
trade and other payables for financial liabilities (which exclude employee-related liabilities and VAT),
and share capital for equity instruments issued by the Group.
Property, plant and equipment
Property, plant and equipment is initially recorded at historical cost, being the purchase cost plus any
cost to prepare the assets for their intended use. Historical cost includes expenditure that is directly
attributable to the acquisition of the item. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to the statement of
comprehensive income during the financial year in which they are incurred.
Property, plant and equipment is subsequently carried at historical cost less accumulated depreciation
and any accumulated impairment losses.
Property, plant and equipment is depreciated on the straight-line basis over each asset’s estimated
useful life.