Notes To The Financial Statements 31 March 2024 (Cont’d) 137 FINANCIAL STATEMENTS & OTHERS 6. INVESTMENTS IN SUBSIDIARIES (CONT’D) (g) During the financial year, the Company recognised an impairment loss on investments in subsidiaries of RM12,109,000 (2023: RM25,395,000) due to decline in operations of certain subsidiaries. Adverse adjustments were made to the forecasted operating cash flows included in the value-in-use calculations. The recoverable amounts were determined using pre-tax discount rates of 7% (2023: 8.0%) 7. GOODWILL ON CONSOLIDATION Group 2024 2023 RM’000 RM’000 Cost At beginning of the financial year 400 400 Disposal of a subsidiary (400) - - 400 Accumulated impairment losses At beginning of the financial year (400) - Impairment loss - (400) Disposal of a subsidiary 400 - - (400) Carrying amount - - (a) Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised, but instead, it is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. This requires an estimation of the value-in-use of the subsidiaries to which goodwill is allocated. Estimating a valuein-use amount requires management to make an estimate of the expected future cash flows from the subsidiaries and also to choose a suitable discount rate in order to calculate the present value of those cash flows. (b) Impairment of goodwill For the purpose of impairment testing in the previous financial year, the recoverable amount of a CGU is determined based on its value-in-use. The value-in-use is determined by discounting the pre-tax cash flows based on financial budgets prepared by the Group covering a five-year period with a terminal value based on the following key assumptions: 2023 % Growth rates 5 Pre-tax discount rate 10 Impairment of goodwill amounted to RM400,000 was recognised during the previous financial year due to adverse adjustments made to the forecast operating cash flows included in the value-in-use calculation of Malaysia’s subsidiaries.
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