FORGING AHEAD - Tradewinds Plantation Berhad

118
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2010
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.9 Impairment of non-financial assets (continued)
Following the adoption of FRS 8 Operating Segments as disclosed in Note 4.22 to the financial statements, the
consequential amendment to FRS 136 Impairment of Assets is also mandatory for financial periods beginning on or
after 1 July 2009. This amendment requires goodwill acquired in a business combination to be tested for impairment
as part of the impairment testing of CGU to which it relates. The CGU to which goodwill is allocated shall represent
the lowest level within the Group at which the goodwill is monitored for internal management purposes and not larger
than an operating segment determined in accordance with FRS 8.
The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use.
In estimating value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset
and from its ultimate disposal 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. An impairment loss is recognised
in profit or loss when the carrying amount of the asset or the CGU, including the allocated goodwill, exceeds the
recoverable amount of the asset or the CGU. The total impairment loss is allocated, first, to reduce the carrying amount
of any goodwill allocated to the CGU and then to the other assets of the CGU on a pro-rata basis of the carrying
amount of each asset in the CGU. The impairment loss is recognised in profit or loss immediately.
An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed
if, and only if, there has been a change in the estimates used to determine the assets’ recoverable amount since the
last impairment loss was recognised.
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.
Such reversals are recognised as income immediately in profit or loss.
4.10 Inventories
Inventories are stated at the lower of cost and net realisable value with weighted average cost being the main basis
for cost.
Cost of inventories comprises the original cost of purchase plus the cost of bringing the inventories to their intended
location and condition. The cost of oil palm products includes the cost of raw materials, direct labour, other direct costs
and a proportion of production overheads based on normal operating capacity of the production facilities.
Cost of consumables comprises all costs of purchase and cost of nursery includes the original cost of purchase, direct
labour and other related overheads.
Cost of livestock includes the original cost of purchase and other attributable costs in nurturing the cattle to their
saleable condition.
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.
TRADEWINDS PLANTATION BERHAD
Annual Report 2010