Page 298 - SAMRC AnnualReport 2025-26

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2026
SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

1.15 Impairment of non-cash-generating assets (continued)

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell
and its value in use.

Useful life is either:
• the period of time over which an asset is expected to be used by the entity; or
• the number of production or similar units expected to be obtained from the asset by the entity.

Criteria developed by the financial statements to distinguish non-cash-generating assets from cash-
generating assets are as follows:

Assets used for administration and in daily operation of the entity is classified as non-cash-generating assets.
Where a substantial part of the asset is hired out, the asset is classified as cash generating assets.

Identification
When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is
impaired.
The entity assesses at each reporting date whether there is any indication that a non-cash-generating
asset may be impaired. If any such indication exists, the entity estimates the recoverable service amount
of the asset.

Irrespective of whether there is any indication of impairment, the entity also tests a non-cash-generating
intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available
for use for impairment annually by comparing its carrying amount with its recoverable service amount.
This impairment test is performed at the same time every year. If an intangible asset was initially
recognised during the current reporting period, that intangible asset was tested for impairment before
the end of the current reporting period.

Value in use
Value in use of non-cash-generating assets is the present value of the non-cash-generating assets
remaining service potential.

The present value of the remaining service potential of a non-cash-generating assets is determined
using the following approach:

Restoration cost approach
Restoration cost is the cost of restoring the service potential of an asset to its pre-impaired level. The
present value of the remaining service potential of the asset is determined by subtracting the estimated
restoration cost of the asset from the current cost of replacing the remaining service potential of the
asset before impairment. The latter cost is determined as the depreciated reproduction or replacement
cost of the asset, whichever is lower.

Recognition and measurement
If the recoverable service amount of a non-cash-generating asset is less than its carrying amount,
the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an
impairment loss.

An impairment loss is recognised immediately in surplus or deficit.
Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.

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