Page 53 - Annual Review 2015-2016

53

Notes to the Financial Statements FINANCIAL REVIEW

Year ended 30 April 2016 (Continued)

Leasehold Term of lease (b) The contract may provide for repayments when the obligation specified in the contract the amount of an impairment is the difference
improvements of the principal or the return to the holder is discharged, cancelled or expires. between the asset’s carrying amount and the
(but not both) to be linked to a single present value of estimated future cash flows,
Fitting out costs 10% per annum or relevant observable index of general price (i) Investments discounted at the financial asset’s original
remaining life of lease inflation of the currency in which the debt In the LLP balance sheet, investments in effective interest rate, where this effect is
if lower instrument is denominated, provided such subsidiaries, joint ventures and associates deemed material.
links are not leveraged. For financial assets carried at cost less
Fixtures and 15% on a reducing (c) The contract may provide for a are measured at cost less provision for impairment, the impairment loss is the
fittings balance basis determinable variation of the return to the impairment. difference between the asset’s carrying
Computer 25% on a straight line holder during the life of the instrument, amount and the best estimate of the amount
equipment basis provided that (i) the new rate satisfies (ii) Fair value measurement that would be received for the asset if it were
condition (a) and the variation is not The best evidence of fair value is a quoted to be sold at the reporting date.
Office equipment 20% on a straight line contingent on future events other than (1) price for an identical asset in an active market. Where indicators exist for a decrease in
basis a change of a contractual variable rate; When quoted prices are unavailable, the impairment loss, and the decrease can be
(2) to protect the holder against credit price of a recent transaction for an identical related objectively to an event occurring
deterioration of the issuer; (3) changes in asset provides evidence of fair value as long after the impairment was recognised, the
levies applied by a central bank or arising as there has not been a significant change in prior impairment loss is tested to determine
from changes in relevant taxation or law; economic circumstances or a significant lapse reversal. An impairment loss is reversed on
or (ii) the new rate is a market rate of of time since the transaction took place. If the an individual impaired financial asset to the
interest and satisfies condition (a). market is not active and recent transactions extent that the revised recoverable value does
(d) There is no contractual provision that of an identical asset on their own are not a not lead to a revised carrying amount higher
could, by its terms, result in the holder good estimate of fair value, the fair value is than the carrying value had no impairment
losing the principal amount or any interest estimated by using a valuation technique. been recognised.
attributable to the current period or prior
periods. Impairment of assets Taxation
(e) Contractual provisions that permit the Assets, other than those measured at The taxation payable on the LLP profits is the
issuer to prepay a debt instrument or fair value, are assessed for indicators of personal liability of the Members, although
permit the holder to put it back to the impairment at each balance sheet date. If payment of such liabilities is administered
issuer before maturity are not contingent there is objective evidence of impairment, an by the LLP on behalf of the Members.
on future events, other than to protect the impairment loss is recognised in profit or loss Consequently, neither LLP taxation nor related
holder against the credit deterioration of as described below. deferred taxation are accounted for in the
the issuer or a change in control of the financial statements.
issuer, or to protect the holder or issuer Non-financial assets The tax expense represents the sum of
against changes in levies applied by a An asset is impaired where there is objective the current and deferred tax relating to the
central bank or arising from changes in corporate subsidiaries. The current tax
relevant taxation or law. evidence that, as a result of one or more expense is based on taxable profits of these
(f) Contractual provisions may permit events that occurred after initial recognition, companies.
the estimated recoverable value of the asset
the extension of the term of the debt has been reduced. The recoverable amount Current tax, including UK corporation tax and
instrument, provided that the return to of an asset is the higher of its fair value less foreign tax, is provided at amounts expected to
the holder and any other contractual costs to sell and its value in use. be paid (or recovered) using the tax rates and
provisions applicable during the extended The recoverable amount of goodwill is derived laws that have been enacted or substantively
term satisfy the conditions of paragraphs enacted by the balance sheet date.
(a) to (c). from measurement of the present value of Current tax assets and liabilities are offset only
the future cash flows of the cash-generating
Debt instruments that are classified as units (CGUs) of which the goodwill is a part. when there is a legally enforceable right to set
payable or receivable within one year on Any impairment loss in respect of a CGU is off the amounts and the Group intends either
initial recognition and which meet the above allocated first to the goodwill attached to that to settle on a net basis or to realise the asset
conditions are measured at the undiscounted CGU, and then to other assets within that and settle the liability simultaneously.
amount of the cash or other consideration CGU on a pro-rata basis.
expected to be paid or received, net of
impairment. Where indicators exist for a decrease in Members’ interests
impairment loss, the prior impairment
Financial assets are derecognised when and loss is tested to determine reversal. An Members’ capital is repayable on retirement
only when a) the contractual rights to the impairment loss is reversed on an individual of the Member and is therefore classified as
cash flows from the financial asset expire or impaired asset to the extent that the revised a liability. Because Members may retire with
are settled, b) the Group transfers to another recoverable value does not lead to a revised less than one year’s notice and typically have
party substantially all of the risks and rewards carrying amount higher than the carrying their capital repaid within one year of serving
of ownership of the financial asset, or c) value had no impairment been recognised. notice, Members’ capital is shown as being
the Group, despite having retained some Where a reversal of impairment occurs in due within one year.
significant risks and rewards of ownership, respect of a CGU, the reversal is applied first Amounts in ‘Loans and other debts due
has transferred control of the asset to another to the assets (other than goodwill) of the CGU to Members’ (other than Members’ capital
party and the other party has the practical on a pro-rata basis and then to any goodwill classified as a liability) would rank pari passu
ability to sell the asset in its entirety to an allocated to that CGU. with other creditors who are unsecured in the
unrelated third party and is able to exercise event of a winding up. No restrictions
that ability unilaterally and without needing to or limitations exist on the ability of the
impose additional restrictions on the transfer. Financial assets Members to reduce the amount of Members
Financial liabilities are derecognised only For financial assets carried at amortised cost, other interests.