Annual Report 2016
131
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
17. GOODWILL
THE GROUP
2016
2015
HK$’000
HK$’000
COST
At beginning and end of the year
8,142
8,142
IMPAIRMENT
At beginning and end of the year
8,142
8,142
CARRYING AMOUNT
At beginning and end of the year
–
–
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating
units (“CGUs”) that are expected to benefit from that business combination. Goodwill of
HK$8,142,000 has been allocated to ValenceTech Limited and its subsidiaries as a single CGU.
The Group tests goodwill annually for impairment, or more frequently if there are indications that
goodwill might be impaired.
The recoverable amount of the CGU is determined based on value in use calculations. The key
assumptions for the value in use calculations are those regarding the discount rates, growth
rates and expected changes to the selling prices and direct costs during the year. Management
estimates discount rates using pre-tax rates that reflect current market assessments of the time
value of money and the risks specific to the CGU. The growth rates are based on industry growth
forecasts, changes in selling prices and direct costs are based on past practices and expectations
of future changes in the market.
Due to uncertain global economic outlook, the Group revised the CGU’s forecast and the
estimated recoverable amount of the CGU was below its carrying amounts and goodwill was fully
impaired in 2009. The management considered that there is no other material lived long assets in
that CGU and no further impairment was made.
