Cloudberry Clean Energy Annual report 2020

75 Cloudberry Annual report 2020 Financial statements Intangible assets with an indefinite useful life, such as goodwill and water rights owned are not amor- tised but are instead tested annually for impairment. Goodwill Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired business at the date of acquisition. Goodwill is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units for the purpose of the impairment testing. The allocation is made to those cash-generating units or groups of cash-gen- erating units that are expected to benefit from the business combination in which the goodwill arose. Impairment Property, plant and equipment and intangible assets with a definite useful life are tested for impairment to the extent that indicators of impairment exist. Factors that trigger impairment testing include but is not limited to changes in long power price estimates, political changes, underperforming power plants in terms of production or macroeconomic fluctuations. When there are indicators that future earnings cannot justify the carrying value, the recoverable amount is calculated to consider whether an allow- ance for impairment must be made. The recoverable amount is the higher of the asset’s fair value less costs of disposal and its value in use. Previously impaired non-financial assets, except goodwill, are reviewed for possible reversal of the impairment at each reporting date. For the purposes of assessing impairment losses, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units (CGUs)). CGUs in Cloudberry are identified as follows: Property plant and equipment (Power producing assets) · Hydropower Power plants sharing the same water flow and/or being subject to the same infrastruc- ture limitation are managed together to optimise power generation. · Wind farms The individual wind farm. Inventory of projects · The individual project with concession · Groups of similar projects that are connected in progress Equity accounted companies · The individual associated company Goodwill and intangible assets with an indefinite useful life are not depreciated but are considered for impairment once every year and when there are circumstances or indicators implying an impairment test should be performed. Impairment is determined for goodwill by assessing the recoverable amount for each cash-generating unit (CGU) to which the good- will relates. Impairment losses relating to goodwill cannot be reversed in future periods. Leases At the lease commencement date, the Group rec- ognises a lease liability and corresponding right of use asset for all lease agreements in which it is the lessee, except for the following exemptions applied: · Short-term leases (defined as 12 months or less) · Low value assets For these leases, the Group recognises the lease payments as other operating expenses in the state- ment of profit or loss when they incur. Lease liabilities The Group measures the lease liability at the present value of the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date. The lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the Group is reasonably certain to exercise this option. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable The lease payments included in the measurement comprise of: · Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable · Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date