322 / 396
16. Intangible assets (cont’d.)
Impairment testing for goodwill and landing rights (cont’d.)
The recoverable amounts of the CGUs were computed using fair value less cost to sell method based on calculations using cash
flow projections from financial budgets approved by the management covering a five-year period. The discount rates applied to the
cash flow projections and the forecasted growth rates used to extrapolate the cash flows beyond the five-year period are as follows:
Growth rates
Discount rates
2017
2016
2017
2016
CGU
MAA
3%
3%
11.5%
11.6%
IAA
4%
–
16.5%
–
PAA
2%
–
14.5%
–
The calculation of fair value for the IAA CGU is most sensitive to the following assumptions:
Growth rates:
the forecasted growth rates are based on published industry research and do not exceed the long term
average growth rate for the industries relevant to the CGUs.
Discount rates:
discount rates reflect management’s estimate of the risks specific to these entities. In determining
appropriate discount rates for each unit, consideration has been given to the applicable weighted average
cost of capital for each unit.
The recoverable amount of the investment in IAA is within level 3 of the fair value hierarchy. The following table summarises the
quantitative information about the significant unobservable inputs used in level 3 fair value measurement:
Description
Unobservable inputs*
Inputs
Relationship of unobservable
inputs to fair value
IAA
Discount rate
16.5%
Increased discount rate of 1%
would decrease fair value by
RM88,000,000
Long-term growth rate
per annum
4%
Decreased long-term growth rate
by 1% would decrease fair value
by RM57,200,000
* There were no significant inter-relationships between unobservable inputs that materially affect the fair value.
Based on the assessments performed, there is no impairment of goodwill and landing rights attributable to the CGUs. As for MAA
and PAA, management believes no reasonably possible change in any of the above key assumptions would cause the carrying
value, including goodwill, of the unit to materially exceed its recoverable amount.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
[ ]
AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS
308