Page 46 - Bauxite Resources Annual Report 2013

Notes to the Financial Statements cont.
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other
than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
(i) Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts.
(j) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for
doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
(k) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines the classification of its investments at initial recognition and, in
the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless
they are designated as hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date
which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.
Collectability of loans and receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. An allowance account (provision for impairment) is used when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables or in an
otherwise timely manner. The amount of the impairment allowance is the difference between the asset’s carrying amount and
the estimated future cash flows. None of the Group’s loans and receivables has an applicable interest rate hence the cash flows
are not discounted.
The amount of the impairment loss is recognised in the income statement within impairment expenses. When a loan or
receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written
off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses
in the income statement.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that
the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an
insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-
sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months
from the reporting date, which are classified as current assets.
44 Bauxite Resources Annual Report 2013