Consolidated Annual Report 2019

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2019 64 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Notes to the Consolidated Financial Statements For the year ended March 31, 2019 (Expressed in Barbados dollars) 49 16. Other Assets Other assets are comprised of the following: 2019 2018 Accounts receivable $ 11,672,685 10,623,998 Prepaid employee benefit (Note 20) 3,034,372 2,900,836 Prepaid expenses 1,897,177 2,529,026 Premiums receivable 878,324 781,663 Interest receivable on cash resources 3,873 1,482 Dividend receivable 60,000 55,000 Other Assets re Goodwill Group (Note 29) 39,786 39,786 $ 17,586,217 16,931,791 17. Intangible Asset 2019 2018 Balance, beginning of year $ 2,910,000 2,910,000 Less impairment loss (2,910,000) - Balance, end of year $ - 2,910,000 Goodwill is created when one company acquires another for a price higher than the fair market value of its assets less the liabilities that were assumed. Accounting standards require that goodwill be tested for impairment annually and we do so as one of our standard processes in the preparation of our end of year financial statements during the fourth quarter. Events or circumstances that might impact the impairment of goodwill include, but are not limited to, unexpected adverse business conditions, entity level specific economic factors such as interest rate fluctuations, new regulations, loss of key resources, unanticipated competitive activities, and political events. If on assessment the value of goodwill is found to be impaired, a write down in the carrying value of the asset is triggered. In August 2010, goodwill of $2,910,000 was recorded upon the acquisition of CLICO Mortgage and Finance Corporation (CMFC), subsequently rebranded as CAPITA Financial Services Inc. upon its integration into the Group. After completing our annual impairment reviews, we concluded that goodwill in relation to the acquisition of CAPITA Financial Services Inc. was impaired in its entirety during the year ended March 31, 2019. The goodwill was impaired as a result of under-performance against its previous years’ plans combined with various economic and industry factors over the years that significantly and adversely affected the discount rates used in CAPITA Financial Services Inc.’s valuation. The cash flow projections within CAPITA’s business plans that were used for impairment testing were substantially and materially changed from that of previous year and the pre-tax risk adjusted discount rate used in the previous value in use (present value of the future cash flows) calculation at March 31, 2019 was 19.70% compared to 19.00% the previous year. The impairment loss is recognised in the consolidated statement of income, as a separate line item.