HUTCHISON PORT HOLDINGS TRUST 150 NOTES TO THE FINANCIAL STATEMENTS 2 Basis of preparation and material accounting policy information (Continued) (t) Asset impairment (Continued) Impairment of other assets Assets that have an indefi nite useful life are tested for impairment annually and when there is indication that they may be impaired. Assets that are subject to depreciation and amortisation are reviewed for impairment to determine whether there is any indication that the carrying values of these assets may not be recoverable and have suff ered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. Such impairment loss is recognised in income statement except where the asset is carried at valuation and the impairment loss does not exceed the revaluation surplus for that asset, in which case it is treated as a revaluation decrease and is recognised in other comprehensive income. (u) Non-current assets held for sale Non-current assets are classifi ed as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefi ts, fi nancial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifi cally exempt from this requirement. A gain or loss not previously recognised by the date of the sale of the non-current assets is recognised at the date of derecognition. Non-current assets are not depreciated or amortised while they are classifi ed as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classifi ed as held for sale continue to be recognised. Non-current assets classifi ed as held for sale are presented separately from the other assets in the consolidated statement of fi nancial position. (v) Derivative fi nancial instruments and hedging activities Derivative fi nancial instruments are utilised by the Group in the management of its foreign currency and interest rate exposures. The Group’s policy is not to utilise derivative fi nancial instruments for trading or speculative purposes. Derivative fi nancial instruments are initially measured at fair value on the contract date, and are remeasured to fair value at subsequent reporting dates. Changes in fair value are recognised based on whether certain qualifying criteria under HKFRS 9 are satisfi ed in order to apply hedge accounting, and if so, the nature of the items being hedged. The Group documents at the inception of the hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to off set changes in cash fl ows of hedged items. The Group documents its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship. Derivatives designated as hedging instruments to hedge the fair value of recognised assets or liabilities may qualify as fair value hedges. Changes in the fair value of the derivative contracts, together with the changes in the fair value of the hedged assets or liabilities attributable to the hedged risk are recognised in the income statement. At the same time, the carrying amount of the hedged asset or liability in the statement of fi nancial position is adjusted for the changes in fair value.
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