Home' Nufarm Annual Report : Nufarm Annual Report 2016 Contents 3. Significant accounting policies (continued)
(h) Impairment (continued)
(ii) Non-financial assets
The carrying amounts of the group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for
use, the recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs to sell.
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 the time value of money and the risks specific to the asset. For the purpose of
impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows of other assets or groups of assets (the ‘cash-generating unit’). The
goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units
that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount
of other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is 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. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. 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.
Goodwill that forms part of the carrying amount of an investment in an associate or joint venture is not recognised separately,
and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate or joint
venture is tested for impairment as a single asset when there is objective evidence that the investment in an associate or joint
venture may be impaired.
(i) Assets held for sale
Assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather
than continuing use are classified as held for sale. Immediately before classification as held for sale, the assets, or components
of a disposal group, are remeasured in accordance with the group’s accounting policies. Thereafter generally the assets, or
disposal group, are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on
a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro-rata basis, except that
no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which continue to be
measured in accordance with the group’s accounting policies.
Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised
in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or
depreciated. In addition, equity accounting of equity accounted investees ceases once classified as held for sale or distribution.
(j) Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which services are
rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
NOTES TO THE FINANCIAL STATEMENTS continued
NUFARM LIMITED ANNUAL REPORT 2016
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