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AFRICAN DAWN 2015 Annual Report

Accounting Policies continued 1.20 Significant judgements and sources of estimation uncertainty (continued) AFRICAN DAWN 63 ANNUAL REPORT 2015 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 37 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: • classified as loans and receivables; • split between non-current assets and current assets in accordance with the terms and the intention of the lender; • assessed for impairment; and • discounted over the estimate repayment period with deemed interest income being recognised subsequent to the initial recognition. • Debit loans that have repayment terms are: • classified as loans and receivables; • split between non-current assets and current assets in accordance with the terms and the intention of the lender; • assessed for impairment; and • discounted over the repayment period with deemed interest income being recognised subsequent to the initial recognition. Capital amount Classification Initial present value adjustment Deemed interest (income)/ expense R ‘000 R ‘000 R ‘000 National Housing Finance Corporation (“NHFC”) in note 17 1,750 Liability at amortised cost 91 - Sandown Capital Elite Two loan (B) in note 17 1,750 Liability at amortised cost 76 (43) Sandown Capital Interest portion of loan (C) in note 17 3,333 Liability at amortised cost 494 (66) 6,833 - 661 (109) The interest rates that have been applied in the discounting is an effective interest rate of 10.16%. Estimation uncertainty related to Greenoaks Refer to note 10


AFRICAN DAWN 2015 Annual Report
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