Page 95 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
89
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
1 Significant Accounting Policies (Continued)
(j) Impairment of assets (Continued)
(ii) Impairment of other assets (Continued)
– Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. Where an asset does not generate cash inflows largely independent of
those from other assets, the recoverable amount is determined for the smallest group of assets that
generates cash inflows independently (i.e. a cash-generating unit).
– Recognition of impairment losses
An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-
generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in
respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of
the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an
asset will not be reduced below its individual fair value less costs to sell, or value in use, if
determinable.
– Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable
change in the estimates used to determine the recoverable amount. An impairment loss in respect of
goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have been
determined had no impairment loss been recognized in prior years. Reversals of impairment losses
are credited to profit or loss in the year in which the reversals are recognized.
(iii) Interim financial reporting and impairment
Under the Listing Rules, the Group is required to prepare an interim financial report in compliance with IAS/
HKAS 34, Interim financial reporting, in respect of the first six months of the financial year. At the end of the
interim period, the Group applies the same impairment testing, recognition, and reversal criteria as it would
at the end of the financial year (see notes 1(j)(i) and (ii)).
Impairment losses recognized in an interim period in respect of goodwill and unquoted equity securities
carried at cost are not reversed in a subsequent period. This is the case even if no losses, or a smaller loss,
would have been recognized had the impairment been assessed only at the end of the financial year to
which the interim period relates. No impairment losses were recognized in respect of goodwill and
unquoted equity securities carried at cost during the interim period.