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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31 DECEMBER 2012
2 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.4 Summary of Significant Accounting Policies (cont’d)
(m) Impairment of Non-financial Assets
The carrying amounts of the Group’s assets are reviewed for impairment losses when there is an indication
that the assets might be impaired. Impairment is measured by comparing the carrying amounts of the assets
with their recoverable amounts. An impairment loss is recognised in profit or loss immediately.
An asset’s recoverable amount is the higher an asset’s fair value less costs to sell and its value in use. For
the purpose of assessing impairment, assets are grouped at the lowest levels for which they are separately
identifiable cash flows (cash generating units (“CGU”).
In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds its recoverable
amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a
CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those
units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of
units on a pro-rata basis.
Reversal of impairment losses recognised in prior year is recorded where there is indication that the impairment
losses recognised for the assets no longer exist or have decreased. The reversal is recognised to the extent of
the asset’s carrying amount that would have been determined, net of depreciation and amortisation, had no
impairment loss been recognised. The reversal is recognised in the income statement immediately. Impairment
loss on goodwill is not reversed in a subsequent period.
(n) Inventories
Inventories of finished goods, work-in-progress and raw materials are stated at the lower of cost, determined
using the “weighted average” method and net realisable value. Cost of finished goods and work-in-progress
includes cost of raw materials, direct labour and an appropriate allocation of manufacturing overheads. Cost
of raw materials includes the original purchase price plus cost of bringing these inventories to their present
locations. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary to make the sale.
(o) Cash and Cash Equivalents
Cash and cash equivalents consist of cash and bank balances and deposits with financial institutions. Cash
equivalents are short-term, highly liquid investments that are readily convertible to cash with insignificant
risk of changes in value.
(p) Equity Instruments
Ordinary shares are classified as equity instruments. Ordinary shares are recorded at the proceeds received, net
of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity
in the period that they are declared.
(q) Earnings per Ordinary Share
The Group presents basic and diluted earnings per ordinary share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit of loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period, adjusted for own shares held.
Gunung Capital Berhad (330171-P)
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annual report | 2012