Trinidad Cement Limited
Annual Report 2012
54
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December, 2012
(Expressed in Thousands of Trinidad and Tobago Dollars, except where otherwise stated)
2. Significant accounting policies
(continued)
(iv) Significant accounting judgments, estimates
and assumptions
(continued)
Provision for doubtful debts
Management exercises judgment in determining
the adequacy of provisions established for
accounts receivable balances for which collections
are considered doubtful. Judgment is used in the
assessment of the extent of the recoverability
of certain balances. Actual outcomes may be
materially different from the provision established
by management.
(v) Business combinations and goodwill
Business combinations are accounted for using
the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration
transferred, measured at acquisition date fair value
and the amount of any non-controlling interest in
the acquiree. For each business combination, the
acquirer measures the non-controlling interest
in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed
and included in administrative expenses.
When the Group acquires a business, it assesses
the financial assets and liabilities assumed for
appropriate classification and designation in
accordance with the contractual terms, economic
circumstances and pertinent conditions as at the
acquisition date. This includes the separation of
embedded derivatives in host contracts by the
acquiree.
If the business combination is achieved in stages,
the acquisition date fair value of the acquirer’s
previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date
through profit or loss.
Any contingent consideration to be transferred
by the acquirer will be recognised at fair value at
the acquisition date. Subsequent changes to the
fair value of the contingent consideration which is
deemed to be an asset or liability, will be recognised
in accordance with IAS 39 either in profit or loss or
as a change to other comprehensive income. If the
contingent consideration is classified as equity, it
should not be remeasured until it is finally settled
within equity.
Goodwill is initially measured at cost being the
excess of the aggregate of the consideration
transferred and the amount recognised for non-
controlling interest over the net identifiable
assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net
assets of the subsidiary acquired, the difference is
recognised in profit or loss.
After initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s
cash-generating units that are expected to benefit
fromthe combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to
those units.
Where goodwill forms part of a cash-generating unit
and part of the operationwithin that unit is disposed
of, the goodwill associated with the operation
disposed of is included in the carrying amount of
the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed
of in this circumstance is measured based on the
relative values of the operation disposed of and the
portion of the cash-generating unit retained.
(vi) Property, plant and equipment
Property, plant and equipment are stated at
cost less accumulated depreciation and/or
accumulated impairment losses, if any. Such cost
includes the cost of replacing part of the property,
plant and equipment and borrowing costs for
long term construction projects if the recognition
criteria are met. All other repairs and maintenance
are recognised in the statement of income.
