FGV Annual Report 2013

Felda Global Ventures Holdings Berhad 221 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONT’D.) (iii) Goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units (“CGU”) to which the goodwill is allocated. Estimating the recoverable amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The recoverable amounts of CGUs were determined based on the higher of fair value less cost to sell or value in use calculations. As a result of these impairment assessments, the Group did not recognise any impairment. The key assumptions and the sensitivity analysis are as disclosed in Note 21 to the financial statements. (iv) Intangible assets (other than goodwill), property, plant and equipment, investment properties and biological assets The Group tests intangible assets (other than goodwill), property, plant and equipment, investment properties and biological assets for impairment if there is any objective evidence of impairment. Management have assessed that certain intangible assets other than goodwill, property, plant and equipment, investment properties and biological assets may be potentially impaired or the existing impairment may be reversed. The recoverable amounts of these assets were determined based on the higher of fair value less cost to sell or value in use calculations. As a result of the assessment, the Group has recognised an impairment of RM42,285,000 (2012: RM36,616,000) against its property, plant and equipment, investment properties and biological assets, accelerated depreciation of RM8,682,000 (2012: RM8,656,000) against its biological assets and reversal of impairment of RM nil (2012: RM39,375,000) against its intangible assets (other than goodwill) and property, plant and equipment. The key assumptions and the sensitivity analysis are as disclosed in Notes 19, 20, 21 and 29 to the financial statements. (v) Investments in subsidiaries, associates and joint ventures The Group and the Company tests investments in subsidiaries, associates and joint ventures for impairment if there are any indicators of impairment. Management have assessed that the following investments may be impaired due to losses incurred by a subsidiary and joint ventures during the financial year. Investment in Felda Global Ventures Downstream Sdn. Bhd. (“FGVD”), a subsidiary At 31 December 2013, the Company’s investment in FGVD was tested for impairment due to losses incurred by a subsidiary during the financial year. The impairment assessment requires an estimation of the recoverable amount of the cash generating units (“CGU”) to which the investment relates to. The recoverable amount was determined based on the higher of fair value less cost to sell. As a result of the impairment assessment, the Company has recognised an impairment loss of RM12,391,000 (2012: RM115,356,000). The key assumptions and the sensitivity analysis are as disclosed in Note 22 to the financial statements. Investment in Felda Iffco Sdn. Bhd. (“FISB”), a joint venture At 31 December 2013, the Group’s investment in a joint venture, FISB, was tested for impairment due to continuing losses incurred, which is a reassessment of impairment testing performed in the previous financial year. The impairment assessment requires an estimation of the recoverable amount of the cash generating units (“CGU”) to which the investment relates to. The recoverable amount of investment in FISB was determined based on fair value less cost to sell calculations. As a result of the impairment assessment, the Group recognised an impairment loss of RM43,657,000 (2012: RM10,300,000). The key assumptions used to determine the recoverable amount of investment in FISB and the sensitivity analysis are as disclosed in Note 24.