Annual Report and Consolidated Accounts 2015
2.7 IMPAIRMENT OF ASSETS
Intangible assets with a specific lifetime are not
subject to amortisation and are, instead, sub-
ject to annual impairment tests. Assets subject
to amortisation are revaluated to determine
any impairment whenever there are events or
alterations in the circumstances causing their
accounting value not to be recoverable. An im-
pairment loss is recognised in the consolidated
statement of comprehensive income by the
amount by which the recoverable amount ex-
ceeds the accounted amount. The recoverable
amount is the highest amount between an asset’s
fair value minus the costs necessary for its sale
and its utilisation value. To perform impairment
tests, assets are grouped at the lowest level at
which it may be able to separately identify cash
flows (units generating cash flows).
A cash-generating unit (CGU) is the smallest
group of assets which includes the asset and that
generates cash flows from continued use and
which is generally independent from the cash
input from other assets or asset groups. In the
case of tangible assets, each shop was identified
as a cash-generating unit. Shops with negative
Ebitda for at least 2 years are subject to impair-
ment tests.
Consolidation differences are distributed among
the group’s cash-flow generating units (CGUs),
identified according to the country of operation
and the business segment.
The recoverable value of a CGU is determined
based on calculating the utilisation value. Those
calculations apply cash flow forecasts based on
financial budgets approved by the managers and
cover a 5-year period.
The Board of Directors determines the budg-
eted gross margin based on past performance
and on its market growth expectations. The av-
erage weighted growth rate used is consistent
with provisions included in the sector’s reports.
The discount rates used after taxes and reflect
specific risks related with the assets from a CGU.
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