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AFRICAN DAWN Annual Report 2016

Accounting Policies continued categories of revenue. Estimation uncertainty 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 and Elite Two 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 1.13 for the accounting policy regarding the impairment of loans. The amount recognised in 2015 for the impairment of Elite debtors was R1,3 million (2015:R10,8 million.) Refer to note 44, for further information on the specific estimates and assumptions used to assess the recoverability of trade receivables. Goodwill impairment - Knife Capital Group The goodwill of R8,076,000 relating to the acquisition of Knife Capital Group was tested for impairment at year end. No impairment has been recognised. Refer to note 4 for further information about the estimates and assumptions used. Goodwill impairment – Elite Two The share capital of Elite Two was acquired at the same value as the Net Asset Value of Elite Two so no goodwill arose on the acquisition. Refer to note 32 for further information about the estimates and assumptions used. Discounting of interest free loans Several loans are interest free or bear interest at a rate that is not market related. 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; and • discounted over the repayment period with deemed interest expense being recognised subsequent to the initial recognition. • Debit loans that have no repayment terms are: AFRICAN DAWN ANNUAL REPORT 2016 55


AFRICAN DAWN Annual Report 2016
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