My first Publication ocbc_ar17_fullreport_english | Page 172

NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2017
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.9
INVESTMENT PROPERTY (continued)
Investment property held under the Group’s life assurance
fund is stated at fair value at the balance sheet date and
collectively form an asset class which is an integral part
of the overall investment strategy for the asset-liability
management of the life assurance business. The fair value
of the investment properties is determined based on
objective valuations undertaken by independent valuers
at the reporting date. Changes in the carrying value resulting
from revaluation are recognised in the income statement
of the life assurance fund.
2.10 GOODWILL AND INTANGIBLE ASSETS
2.10.1 Goodwill
Goodwill on acquisition of subsidiaries represents the excess of
the consideration transferred, the amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of
any previously held equity interest over the fair value of the
identifiable net assets acquired.
Goodwill is stated at cost less impairment loss. Impairment
test is carried out annually, or when there is indication that the
goodwill may be impaired.
Gains or losses on disposal of subsidiaries and associates include
the carrying amount of goodwill relating to the entity sold.
2.10.2 Intangible assets
Intangible assets are separately identifiable intangible items
arising from acquisitions and are stated at cost less accumulated
amortisation and impairment losses. Intangible assets with finite
useful lives are amortised over their estimated useful lives. The
estimated useful lives range from 10 to 20 years. The useful life of
an intangible asset is reviewed at least at each financial year end.
2.11 NON-CURRENT ASSETS HELD FOR SALE
Non-current assets that are expected to be recovered through
sale rather than through continuing use are classified as held for
sale. Immediately before classification as held for sale, the assets
are measured in accordance with the Group’s accounting policies.
Thereafter, the assets are generally measured at the lower of
their carrying amount and fair value less cost to sell.
2.12 IMPAIRMENT OF ASSETS
Financial assets
The Group assesses at each balance sheet date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired.
2.12.1 Loans and receivables/financial assets carried at
amortised cost
Loans are assessed for impairment on a loan-by-loan basis except
for homogeneous loans below a certain materiality threshold,
which are grouped together according to their risk characteristics
and collectively assessed, taking into account the historical loss
experience on such loans.
A specific allowance is established when the present value of
recoverable cash flows for a loan is lower than the carrying value
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OCBC ANNUAL REPORT 2017
of the loan. Portfolio allowances are set aside for unimpaired loans
based on portfolio and country risks, as well as industry practices.
Specific allowances are written back to the income statement
when the loans are no longer impaired or when the loss on loan
is determined to be less than the amount of specific allowance
previously made. Loans are written-off when recovery action has
been instituted and the loss can be reasonably determined.
2.12.2 Other non-derivative financial assets
Impairment of other non-derivative financial assets is calculated
as the difference between the asset’s carrying value and
the estimated recoverable amount. For equity investments
classified as available-for-sale, when there is a significant or
prolonged decline in the fair value of the asset below its cost,
the cumulative loss (measured as the difference between the
acquisition cost and the current fair value, less any impairment
loss on that asset previously recognised in the income statement)
is removed from the fair value reserve within equity and
recognised in the income statement.
Impairment losses on equity investments recognised in the
income statement are not reversed through the income
statement, until the investments are disposed of. For debt
investments, reversal of an impairment loss that can be related
objectively to an event occurring after the impairment loss was
recognised, is recognised in the income statement.
Other assets
2.12.3 Goodwill
For the purpose of impairment testing, goodwill is allocated to
each of the Group’s Cash Generating Units (“CGU”) expected to
benefit from synergies of the business combination. The Group’s
CGUs correspond with the business segments identified in the
primary segment report.
An impairment loss is recognised in the income statement when
the carrying amount of the CGU, including the goodwill, exceeds
the recoverable amount of the CGU. The CGU’s recoverable
amount is the higher of its fair value less cost to sell and its
value in use. Impairment loss on goodwill cannot be reversed in
subsequent periods.
2.12.4 Investments in subsidiaries and associates

Property, plant and equipment

Investment property

Intangible assets
Investments in subsidiaries and associates, property, plant and
equipment, investment property and intangible assets, are
reviewed for impairment on the balance sheet date or whenever
there is any indication that the carrying value of an asset may
not be recoverable. If such an indication exists, the carrying value
of the asset is written down to its recoverable amount (i.e. the
higher of the fair value less cost to sell and the value in use).
The impairment loss is recognised in the income statement,
and is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The carrying amount of an
asset is increased to its revised recoverable amount, provided
that this amount does not exceed the carrying value that would
have been determined (net of amortisation or depreciation) had
no impairment loss been recognised for the asset in prior years.