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GB Auto and its Subsidiaries (S.A.E)
Notes to the Consolidated Financial Statements
For the year ended 31 December 2012
(In the notes all amounts are shown in thousand Egyptian pounds unless otherwise stated)
58
GB Auto
•
2012 ANNUAL REPORT
The management annually assesses whether the carrying amount of goodwill is fully recoverable. Impairment losses on goodwill are
charged to the statement of income and are not reversed.
Gains and losses on the disposal of investments in subsidiaries / associates include the carrying amount of goodwill relating to the entity
sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating
units or Groups of cash-generating units that are expected to benefit directly from the business combination in which the goodwill arose.
ii. Exclusive agency and trading rights
The amounts paid against agency right are recognized as intangible assets and amortized over 25 years.
iii. Computer software
Costs associated with developing or maintenance of computer software programmes are recognised as an expense as incurred. Costs
that are directly associated with identifiable and unique software products controlled by the Company and will probably generate
economic benefits exceeding costs beyond one year, are recognised as intangible assets.
Expenditure, which enhances or extends the performance of computer software programmes beyond their original specifications
is recognised as a capital improvement and added to the original cost of the software. Expenditure to acquire computer software is
capitalized and included as an intangible asset.
Computer software costs recognised as assets are amortised using the straight-line method over their useful lives, not exceeding a
year of 3 years.
iv. Knowhow
The amounts paid against knowhow are recognized as intangible assets in case of knowhow have a finite useful life and amortized
over their estimated useful lives.
The Company assesses the estimate useful life of the knowhow agreement with Hyundai Corporation Company for Vehicles Manu-
facturing under trade name of Hyundai Sonata.
The estimated useful life has been determined based on the number of vehicles expected to be sold under this agreement.
The statement of income is charged with amortization expense equivalent to the percentage of number vehicles sold divided total
number of vehicles expected to be sold under this agreement.
F. Impairment of non-financial assets – long-term
Property, plant, equipment, and other non-current assets, including intangible assets are reviewed for impairment losses whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in
the statement of income for the year for the amount by which the carrying amount of the asset exceeds its recoverable amount, which
is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the low-
est level, for which there are separately identifiable cash flows.
Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recog-
nized for the asset no longer exist or has decreased. Impairment losses are also reversed to release the impairment amount that is
equal to the depreciation for the year of the impaired balance. The reversals are recorded in income statement.
G. Non-current assets (or disposal groups) held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally
through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less
costs to sell.
H. Investments available for sale
The investments available for sale are initially recognized at their fair value at the acquisition date. Subsequently, available for sale
investments are measured at fair value (market value) and the changes in fair value are recognized as available for sale reserve in the
equity. The reserve related for an available for sale investment is realized in income statement when such investment is disposed.