For the purpose of impairment testing, goodwill is allocated to cash generating units ("CGU") and management has determined that the appropriate CGUs for Newalta are: the Western Facilities business unit, Eastern Facilities business unit, Ville Ste-Catherine ("VSC") business unit, and Onsite division. Goodwill is allocated to those CGUs that are expected to benefit from the business combination in which the goodwill arose.
When the net book value of a CGU is higher than its value in use, the difference is an impairment loss. An impairment loss is first written off against any goodwill associated with the CGU with any remaining impairment loss proportionally allocated to the assets of that CGU. Management determined that as at December 31, 2012 and December 31, 2011 there were no impairments of property, plant and equipment, intangibles and goodwill.
h) Decommissioning liabilities
Newalta provides for estimated future decommissioning costs for all its facilities based on the useful lives of the assets and the long-term commitments of certain sites. Over this period, Newalta recognizes the liability for the future decommissioning liabilities associated with property, plant and equipment. These obligations are initially measured at the discounted future value of the liability. This value is capitalized as part of the cost of the related asset and amortized over the asset's useful life. The balance of the liability is adjusted each period for the unwinding of the discount, with the associated expense included within finance charges. Decommissioning costs are estimated by management, in consultation with Newalta's engineers and environmental, health and safety staff, on the basis of current regulations, costs, technology and industry standards. Actual decommissioning costs are charged against the provision as incurred.
i) Revenue recognition
Revenue is recognized in the period products are delivered or services provided and when all the following conditions have been satisfied:
-- Newalta has transferred the significant risks and rewards of ownership of the goods to the buyer;-- Newalta retains no continuing managerial involvement to the degree usually associated with ownership or effective control over the goods sold;-- the amount of revenue can be measured reliably;-- it is probable that the economic benefits associated with the transaction will flow to Newalta; and-- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The major sources of revenue relate to the processing of waste material and the sale of recycled products recovered from the waste. Revenue is recognized when waste material is received and a risk and reward transferred for the waste. Revenue from the sale of recycled products is recognized when products are delivered to customers or pipelines. For construction projects, revenue is recognized on a percentage of completion basis. For onsite projects and contracts, processing revenue is recognized on a per-day fee, throughput, percentage of completion basis, or over the life of the project.
Newalta offers complete and integrated solutions to meet customer needs. These solutions may involve the delivery of multiple services and products occurring at different points in time and/or over different periods in time. As appropriate, these multiple element arrangements are separated into their units of accounting based upon their relative fair values when the delivered item has value to the customer on a stand-alone basis. If the fair value of the delivered item is not reliably measurable, then the revenue is allocated based on the difference between the total arrangement consideration and the fair value of the undelivered item.
