Accounting Policies continued AFRICAN DAWN 43 ANNUAL REPORT 2015 1.4 Goodwill (continued) Amortisation and impairment Goodwill is not amortised, but is tested for impairment at least once a year. Any impairment loss is recognised immediately in profit or loss and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Each CGU that contains goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of the value in use and the fair value less costs of disposal. Any impairment loss is recognised immediately in profit or loss and is not subsequently reversed. Impairment losses that are recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to a CGU and then to reduce the carrying amount of the other assets in the CGU on a pro rata basis. However, the carrying amount of these other assets may not be reduced below the highest of its fair value less costs to sell, its value in use and zero. On disposal of a subsidiary the goodwill attributable to the subsidiary is included in the determination of the profit or loss on disposal. 1.5 Investment in associate Associates Associates are those entities, including unincorporated entities, over which the Group has the ability to exercise significant influence, but no control or joint control, through participation in the financial and operating policy decisions of the investment (that is neither a subsidiary nor an investment in a joint arrangement). Significant influence Significant influence is generally demonstrated by the Group holding in excess of 20%, but no more than 50%, of the voting rights. Dates and equity accounting The profit or loss of the associate and assets and liabilities, including goodwill identified on acquisition, net of any accumulated impairment losses, are included in the Group financial statements using the equity method of accounting from the date significant influence commences until the date significant influence ceases. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition. The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. Where an associate has a reporting period that is different from that of the Group, the results of the associate are adjusted to reflect a reporting period consistent with the Group’s reporting period.
AFRICAN DAWN 2015 Annual Report
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