FGV Annual Report 2012

89 F i n a n c i a l S t a t e m e n t s 2 0 1 2 P e n y a t a K e w a n g a n 28 BIOLOGICAL ASSETS (continued) Impairment test for biological assets – non-current During the financial year, several planted areas being earmarked for replanting with a different crop was identified as indicators for an impairment test to be performed for the affected biological assets. The recoverable amount of the affected planted area biological assets, each being identified as an individual CGU, is determined based on value in use calculation using a discounted cash flow calculation using cash flow projections based on financial budgets approved by the Directors for the period up to the change of crop. The key assumptions used for the value in use calculation are as follows: (a) Discount rate of 11.5%, which reflects specific industry risks relating to the plantation business, adjusted for other risk in respect of the planted area, for instance, size and age. (b) Other key assumptions being similar to the key assumptions used to compute the fair value of the LLA liability (refer Note 42). Based on the assessment done, using the key assumptions above, the Group has recognised a total impairment of RM4,316,000 which is recorded as an impairment loss in costs of sales for the financial year ended 31 December 2012. The balance carrying amount is subject to accelerated depreciation over the period to the year of planned replanting with a different crop. 29 INVENTORIES Group 2012 2011 RM’000 RM’000 Cost Raw materials 476,677 272,901 Work in progress 21,901 27,358 Finished goods 74,692 87,477 573,270 387,736 At net realisable value: Finished goods 24,397 43,057 597,667 430,793