NOTES TO THE CONSOLIDATED FINANCIAL  STATEMENTS  (RMB AND US$ AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)  The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any  indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s  recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair  value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless  the asset does not generate cash inflows that are largely independent of those from other assets or groups of  assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered  impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax  discount rate that reflects current market assessments of the time value of money and the risks specific to the  asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such  transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by  valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. Impairment losses of continuing operations, including impairment on inventories, are recognized in the  statement of profit or loss in expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an  indication that previously recognized impairment losses no longer exist or have decreased. If such indication  exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is  reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount  since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset  does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined,  net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is  recognized in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the  reversal is treated as a revaluation increase. The following assets have specific characteristics for impairment testing: Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be  impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs)  to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an  impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. Intangible assets with indefinite useful lives are tested for impairment annually as at December 31 either  individually or at the CGU level, as appropriate, and when circumstances indicate that the carrying value may  be impaired. China Yuchai International Limited | Annual Report 2013 56 Intangible assets Goodwill (n)  Impairment of non-financial assets 2.3  Summary of significant accounting policies (cont’d) 2.  Basis of preparation and accounting policies (cont’d)