Page 60 - DWF Annual Report 2017

Notes to the Financial Statements

Year ended 30 April 2017 (continued)

1. ACCOUNTING POLICIES impose additional restrictions on the transfer. Financial assets
(continued) Financial liabilities are derecognised only For financial assets carried at amortised cost,
(a) The contractual return to the holder is (i) a when the obligation specified in the contract the amount of an impairment is the difference
between the asset’s carrying amount and the
is discharged, cancelled or expires.
fixed amount; (ii) a positive fixed rate or a
positive variable rate; or (iii) a combination present value of estimated future cash flows,
discounted at the financial asset’s original
of a positive or a negative fixed rate and a (i) Investments effective interest rate, where this effect is
positive variable rate. In the LLP balance sheet, investments in deemed material.
(b) The contract may provide for repayments subsidiaries, joint ventures and associates are For financial assets carried at cost less
of the principal or the return to the holder measured at cost less provision for impairment. impairment, the impairment loss is the
(but not both) to be linked to a single Investments in ordinary shares (where difference between the asset’s carrying
relevant observable index of the general shares are publicly traded or their fair value
price inflation of the currency in which the is reliably measurable) are measured at fair amount and the best estimate of the amount
that would be received for the asset if it were
debt instrument is denominated, provided value through profit or loss. Where fair value to be sold at the reporting date.
such links are not leveraged. cannot be measured reliably, investments are
(c) The contract may provide for a measured at cost less impairment. Where indicators exist for a decrease in
determinable variation of the return to the impairment loss, and the decrease can be
related objectively to an event occurring
holder during the life of the instrument, (ii) Fair value measurement after the impairment was recognised, the
provided that (i) the new rate satisfies The best evidence of fair value is a quoted
condition (a) and the variation is not price for an identical asset in an active market. prior impairment loss is tested to determine
reversal. An impairment loss is reversed on
contingent on future events other than When quoted prices are unavailable, the
(1) a change of a contractual variable rate; price of a recent transaction for an identical an individual impaired financial asset to the
extent that the revised recoverable value does
(2) to protect the holder against credit asset provides evidence of fair value as long not lead to a revised carrying amount higher
deterioration of the issuer; (3) changes in as there has not been a significant change in
levies applied by a central bank or arising economic circumstances or a significant lapse than the carrying value had no impairment
been recognised.
from changes in relevant taxation or law; of time since the transaction took place. If the
or (ii) the new rate is a market rate of market is not active and recent transactions
interest and satisfies condition (a). of an identical asset on their own are not a Taxation
(d) There is no contractual provision that good estimate of fair value, the fair value is The taxation payable on the LLP profits is the
could, by its terms, result in the holder estimated by using a valuation technique. personal liability of the Members, although
losing the principal amount or any interest payment of such liabilities is administered
attributable to the current period or prior Impairment of assets by the LLP on behalf of the Members.
periods. Assets, other than those measured at Consequently, neither LLP taxation nor related
(e) Contractual provisions that permit the fair value, are assessed for indicators of deferred taxation are accounted for in the
issuer to prepay a debt instrument or impairment at each balance sheet date. If financial statements.
permit the holder to put it back to the there is objective evidence of impairment, an The tax expense represents the sum of
issuer before maturity are not contingent impairment loss is recognised in profit the current and deferred tax relating to the
on future events, other than to protect the or loss as described below. corporate subsidiaries. The current tax expense
holder against the credit deterioration of is based on taxable profits of these companies.
the issuer or a change in levies applied by Non-financial assets Current tax, including UK corporation tax and
a central bank or arising from changes in An asset is impaired where there is objective foreign tax, is provided at amounts expected to
relevant taxation or law. evidence that, as a result of one or more be paid (or recovered) using the tax rates and
(f) Contractual provisions may permit events that occurred after initial recognition, the laws that have been enacted or substantively
the extension of the term of the debt estimated recoverable value of the asset has enacted by the balance sheet date.
instrument, provided that the return to the been reduced. The recoverable amount of an Current tax assets and liabilities are offset
holder and any other contractual provisions asset is the higher of its fair value less costs to only when there is a legally enforceable right
applicable during the extended term satisfy sell and its value in use. to set off the amounts and the Group intends
the conditions of paragraphs (a) to (c). The recoverable amount of goodwill is derived either to settle on a net basis or to realise the
Debt instruments that are classified as payable from measurement of the present value of asset and settle the liability simultaneously.
or receivable within one year on initial recognition the future cash flows of the cash-generating
and which meet the above conditions are units (CGUs) of which the goodwill is a part.
measured at the undiscounted amount of the Any impairment loss in respect of a CGU is
cash or other consideration expected to be paid allocated first to the goodwill attached to that
or received, net of impairment. CGU, and then to other assets within that CGU
Financial assets are derecognised when and on a pro-rata basis.
only when a) the contractual rights to the Where indicators exist for a decrease in
cash flows from the financial asset expire or impairment loss, the prior impairment loss is
are settled, b) the Group transfers to another tested to determine reversal. An impairment
party substantially all of the risks and rewards loss is reversed on an individual impaired asset
of ownership of the financial asset, or c) to the extent that the revised recoverable
the Group, despite having retained some value does not lead to a revised carrying
significant risks and rewards of ownership, amount higher than the carrying value had no
has transferred control of the asset to another impairment been recognised. Where a reversal
party and the other party has the practical of impairment occurs in respect of a CGU, the
ability to sell the asset in its entirety to an reversal is applied first to the assets (other than
unrelated third party and is able to exercise goodwill) of the CGU on a pro-rata basis and
that ability unilaterally and without needing to then to any goodwill allocated to that CGU.