Page 98 - ar2012

CDL Hospitality TrustS
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Notes to the Financial Statements
3 Significant accounting policies (cont’d)
3.5 Impairment
Financial assets
A fnancial asset is assessed at each reporting date to determine whether there is any objective
evidence that it is impaired. A fnancial asset is considered to be impaired if objective evidence
indicates that one or more events have had a negative effect on the estimated future cash fows of
that asset.
Individually signifcant fnancial assets are tested for impairment onan individual basis. The remaining
fnancial assets are assessed collectively in groups that share similar credit risk characteristics.
An impairment loss in respect of a fnancial asset measured at amortised cost is calculated as the
difference between its carrying amount, and the present value of the estimated future cash fows
discounted at the original effective interest rate.
All impairment losses are recognised in the statement of total return.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after
the impairment loss was recognised. For fnancial assets measured at amortised cost, the reversal
is recognised in the statement of total return.
Non-fnancial assets
The carrying amounts of the H-REIT Group’s assets, other than investment properties, are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, the assets’ recoverable amounts are 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 fows are discounted
to their present value using a pre-tax discount rate that refects current market assessments of the
time value of money and the risks specifc to the asset. For the purpose of impairment testing,
assets that cannot be tested individually are grouped together into the smallest group of assets
that generates cash infows from continuing use that are largely independent of the cash infows of
other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. A cash-generating unit is the smallest identifable asset group
that generates cash fows that largely are independent from other assets and groups. Impairment
losses are recognised in the statement of total return.
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 if no impairment loss had been recognised.