Notes to The
Financial Statements
Year ended 31 December 2015
3 Significant accounting policies (Cont’d)
3.5 Impairment (cont’d)
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than investment property, 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.
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 or cash-generating unit. For the purpose of impairment testing, assets that cannot be tested
individually 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,
or CGU”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the Statement of Total Return. Impairment losses recognised in
respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then
to reduce the carrying amounts of the other assets in the unit (group of units) on a
pro rata
basis.
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.
3.6 Revenue recognition
(i)
Rental income from operating leases
Rental income receivable under operating leases is recognised in the Statement of Total Return on a
straight-line basis over the term of the lease, except where an alternative basis is more representative of
the pattern of benefits to be derived from the leased assets. Lease incentives granted are recognised as an
integral part of the total rental to be received over the term of the lease. Contingent rentals, which include
gross turnover rental, are recognised as income in the accounting period on a receipt basis.
(ii)
Interest income
Interest income is recognised on an accrual basis, using the effective interest method.
(iii)
Dividend income
Dividend income is recognised in the Statement of Total Return on the date the Trust’s right to receive
payment is established.
105
ParkwayLife REIT
Annual Report 2015
