Page 169 - KWAP_AR2022

FoR BetteR RetuRns Annual Report 2022 167

notes to the
financial statements
for the year ended 31 december 2022

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.18 Impairment Of Non-Financial Assets

impairment assessment is executed at each reporting date to identify the indication for impairment of assets.
in the event of an indication for impairment or the requirement for an impairment assessment, the estimated
recoverable amount of the asset is established.
recoverable amount is the higher of fair value of the asset less costs to sell and value in use of the asset.
for impairment assessment purposes, assets are grouped at the lowest levels where the cash flows are separately
identifiable, i.e. cgu.
in the assessment of value in use, the estimated future cash flows expected to be generated by the asset are
discounted to the present value using the pre-tax discount rate that reflects the current market assessment
of the time value of money as well as the risks specific to the asset. in the event the carrying amount of the
asset exceeds its recoverable amount, the asset is written down to its recoverable amount. impairment losses
recognised in respect of a cgu or groups of cgus are initially allocated to reduce the carrying amount of
goodwill allocated to the unit or groups of units, if any, followed by the reduction of the carrying amount of other
assets in the unit or groups of units on a pro-rata basis. impairment losses are recognised in profit or loss.

impairment assessments are executed at each reporting date to determine whether indicators of previously
recognised impairment losses may no longer exist or may have decreased. previously recognised impairment
losses are only reversed in the event of changes in the estimates used to determine the asset’s recoverable amount
from the previous recognition of impairment losses. in this case, the carrying amount of the asset is increased
to its recoverable amount. however, such increase shall not exceed the previously determined carrying amount,
net of depreciation, whereby there were no impairment losses previously recognised. reversals of impairment
losses are recognised in profit or loss. impairment losses on goodwill are not reversed in the subsequent period.
2.19 Impairment Of Financial Assets

the group and KWap assess on a forward-looking basis the ecl associated with its financial assets carried
at amortised cost and fVoci. the impairment methodology applied is dependent on whether there was a
significant increase in the credit risk.
the ecl represents a probability-weighted estimate of the difference between the present value of cash flows
according to a contract and the present value of cash flows that the group and KWap expect to receive,
over the remaining life of the financial asset.
the measurement of the ecl reflects:

• an unbiased and probability-weighted amount that is determined by the evaluation of a range of possible
outcomes;
• the time value of money; and
• the reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.

poci financial assets are assets that are credit-impaired on initial recognition. for poci financial assets, lifetime
expected credit losses are incorporated into the calculation of the effective interest rate on initial recognition.
consequently, poci financial assets do not carry an impairment allowance on initial recognition. the amount
recognised as a loss allowance subsequent to initial recognition is equal to the changes in lifetime expected
credit losses since initial recognition of the asset.