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SEE HUP SENG LIMITED
Annual Report 2012
49
Notes to the Financial Statements
31 DECEMBER 2012
2 Significant Accounting Policies (Continued)
(g) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use
or sale, are added to the cost of those assets, until such time as the assets are substantially ready for
their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred using
the effective interest method.
(h) Investments in Subsidiaries and an Associated Company
Investments in subsidiaries and an associated company are stated at cost less accumulated impairment
losses in the Company’s balance sheet. On disposal of investments in subsidiaries, the difference between
net disposal proceeds and the carrying amount of the investment is taken to profit or loss.
(i) Impairment of Non-Financial Assets
(i) Goodwill
Goodwill is tested for impairment annually and whenever there is an indication that the goodwill
may be impaired. Goodwill included in the carrying amount of an investment in an associated
company is tested for impairment as part of the investment, rather than separately.
For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s
cash-generating-units (“CGU”) expected to benefit from synergies arising from the business
combination.
An impairment loss is recognised when the carrying amount of a CGU, including the goodwill,
exceeds the recoverable amount of the CGU. Recoverable amount of a CGU is the higher of the
CGU’s fair value less cost to sell and its value-in-use.
The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill
allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying
amount of each asset in the CGU.
An impairment loss on goodwill is recognised in profit or loss and is not reversed in a subsequent
period.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-
generating unit is disposed of, the goodwill associated with the operation disposed of is included
in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative fair values
of the operations disposed of and the portion of the cash-generating unit retained.