AFRICAN DAWN ANNUAL REPORT 2018 49 Accounting Policies continued Other significant management judgements Estimation uncertainty Impairment of non-financial assets The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair value less costs of disposal. These calculations require the use of estimates and assumptions. It is reasonably possible that certain key assumptions may change, which may then impact our estimations and may then require a material adjustment to the carrying value of assets. These assets that have been tested for impairment are as follows: • Goodwill 2018 and 2017 - refer to Note 4 • Intangible assets 2018 and 2017 - refer to Note 5 Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different. Impairment of trade receivables in Elite The amount recognised related to the impairment of receivables by Elite and Elite Two requires the use of significant estimates and assumptions. The Group reviews its loans to assess impairment at least on a monthly basis. In determining whether an impairment loss should be recognised, the Group makes judgements as to whether there has been an adverse change in the payment status of borrowers in a Group, or national or local economic conditions that correlate with defaults on assets in the Group. Management uses estimates based on historical loss experience for assets with similar credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing requires significant judgement and estimation. Refer Note 1.11 for the accounting policy regarding the impairment of loans. Refer to Note 36, for further information on the specific estimates and assumptions used to assess the recoverability of trade receivables. Discounting of interest free loans The following judgements are made relating to these loans. • Credit loans that have no repayment terms are: - classified as liabilities at amortised cost; - included in current liabilities (because the company does not have the right to defer payment for at least 12 months after the reporting date;) and - not discounted because the amount that could be demanded by the lender is equal to the carrying amount of the loans. • Credit loans that have repayment terms are: - classified as liabilities at amortised cost; - split between non-current liabilities and current liabilities in accordance with the terms. Loans are interest free or bear interest at a rate that is not market related. • Debit loans that have no repayment terms are: - classified as loans and receivables; - assessed for impairment; and - discounted over the estimate repayment period with deemed interest income being recognised subsequent to the initial recognition. • Debit loans that have repayment terms are: - classified as loans and receivables; - split between non-current assets and current assets in accordance with the terms and the intention of the lender; - assessed for impairment; and - discounted over the repayment period with deemed interest income being recognised subsequent to the initial recognition.
AFRICAN DAWN 2018 Annual Report
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