Annual Report 2005 - Leeden Limited

Notes to the Financial Statements- 31 December 2005412.15 Impairment of non-financial assets (cont’d)An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment lossesrecognised for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverableamount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used todetermine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount ofthe asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have beendetermined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Reversal of an impairment lossis recognised in the profi t and loss account unless the asset is carried at revalued amount, in which case the reversal in excess ofimpairment loss previously recognised through the profi t and loss account is treated as a revaluation increase. After such a reversal,the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on asystematic basis over its remaining useful life.ACE DYNAMICS LIMITEDThe Group does not reverse in a subsequent period, any impairment loss recognised for goodwill.2.16 Financial assets and financial liabilities(i)Recognition and derecognitionFinancial assets and fi nancial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party tothe contractual provisions of the fi nancial instrument. All regular way purchases and sales of fi nancial assets that require deliveryof the assets within the period generally established by regulation or market convention, are recognised on the settlement date.A fi nancial asset, or, where applicable, a part of a fi nancial asset or group of similar fi nancial assets is derecognised where :• the contractual rights to the cash fl ows from the asset have expired;• the Group retains the contractual rights to receive cash fl ows from the asset, but has assumed an obligation to pay them infull without material delay to a third-party under a “pass-through” arrangement; or• the Group has transferred its rights to receive cash fl ows from the asset and either (a) has transferred substantially all therisks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset,but has transferred control of the asset.Where the Group has transferred its rights to receive cash fl ows and has neither transferred nor retained substantially all therisks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuinginvolvement in the asset.On the derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of (a) theconsideration received (including any new asset obtained less any new liability assumed) and (b) any cumulative gain or loss thathas been recognised in equity is recognised in the profi t and loss account.A fi nancial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. Where an existingfi nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liabilityare substantially modifi ed, such an exchange or modifi cation is treated as a derecognition of original liability and the recognitionof a new liability, and the difference in the carrying amounts of the new and original liabilities is recognised in the profi t and lossaccount.(ii) Classification and measurementFinancial assets and liabilities within the scope of FRS 39 are classifi ed and accordingly measured as follows :• Designated as fair value through profi t and lossThese are fi nancial assets and fi nancial liabilities designated at inception to be measured at fair value through profi t and lossaccount. Such designation, once made, is irrevocable.Financial assets and fi nancial liabilities at fair value through profi t and loss are recognised initially at fair value with transactioncosts taken directly to the profi t and loss account, and are subsequently remeasured at fair value.ANNUAL REPORT 2005