Page 115 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
109
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
16 Goodwill
The Group
2012 2011
RMB million RMB million
Cost and carrying amount:
As at 1 January and 31 December 36,894 36,894
Impairment tests for goodwill
As set out in IAS/HKAS 36 Impairment of Assets, a cash-generating unit is the smallest identifiable group of assets that
generate cash inflows from continuing use that are largely independent of the cash flows from other assets or groups
of assets. For the purpose of impairment testing of goodwill, goodwill is allocated to a group of cash-generating units
(being subsidiaries acquired in each acquisition). Such group of cash-generating units represent the lowest level within
the Group for which the goodwill is monitored for internal management purposes.
The recoverable amount of the cash-generating units is determined based on value-in-use, which is calculated by
using the discounted cash flow method. This method considers the cash flows of the subsidiaries (cash-generating
units) for the five years ending 31 December 2017 with subsequent transition to perpetuity. For the years following the
detailed planning period, the assumed continual growth of 0.5% for the operation in Hong Kong and 1% for operations
in Mainland China to perpetuity are used which comply with general expectations for the business. The present value
of cash flows is calculated by discounting the cash flow by pre-tax interest rate of approximately 10% (2011: 10%).
Management performed impairment tests for the goodwill and determined that goodwill was not impaired.