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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.8 Impairment of non-financial assets (continued)
In estimating the 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 for which the future cash flow estimates have not been adjusted. An impairment
loss is recognised in profit or loss when the carrying amount of the asset or the CGU, including the
goodwill or intangible asset, 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.
4.9 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the first-in, first-out formula. The cost comprises all costs of purchase, cost of
conversion plus other costs incurred in bringing the inventories to their present location and condition.
The cost of work-in-progress and finished goods includes the cost of raw materials and other direct cost.
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.
4.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial
liability or equity instrument of another enterprise.
A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right
to receive cash or another financial asset from another enterprise, or a contractual right to exchange
financial assets or financial liabilities with another enterprise under conditions that are potentially
favourable to the Group.