Huawei 2015 Annual Report Download - page 76

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74
(i) The amortisation charge for the year is allocated to "cost of sales", "research and development expenses",
"selling and administrative expenses" in the consolidated statement of total comprehensive income based on
the use of the related assets. Impairment losses are included in "other expenses".
(ii) Goodwill impairment testing
Goodwill is allocated to the Group's cash-generating units (CGU) or group of CGUs, which is not larger than an
operating segment and is expected to benefit from the synergies of the acquisition, as follows:
2015 2014
CNY million CNY million
Sectors under Enterprise business group ––
Beijing Huawei Longshine Information Technology Company Limited
(Beijing Huawei Longshine) 154 154
Others 242 153
396 307
For impairment test purposes, the recoverable amounts of the CGUs are based on value-in-use calculations by using
a discounted cash flow model. The calculations use cash flow projections based on financial budgets approved by
management covering a five-year period, based on industry knowledge. Cash flows beyond the five-year periods
are extrapolated using an estimated growth rate which does not exceed the long-term average growth rate for the
business in which the CGU or group of CGUs operates. Cash flows are discounted using pre-tax discount rates that
reflect specific risks relating to respective CGU or group of CGUs.
Key assumptions used in the calculation are as follows:
As at December 31
2015 2014
%%
Sectors under Enterprise business group
– Discount rate N/A 16.4
– Terminal value growth rate N/A 3.0
Beijing Huawei Longshine
– Discount rate 15.5 15.5
– Terminal value growth rate 3.0 3.0
During the year ended December 31, 2014, impairment loss of CNY3,223 million and CNY222 million respectively
were recognised for the goodwill allocated to and the intangible assets of the acquired sectors under Enterprise
business group. Goodwill relating to this CGU was written off in full.