Goodwill

12 Months Ended

Dec. 31, 2019

GOODWILL


	2019		2018
	Million		Million
Cost and carrying amount:
As of January 1 and December 31		35,343		35,343

Impairment tests for goodwill

As of December 31, 2019, the goodwill of RMB 35,300 million is attributable to the cash-generating units in relation to the operation in Mainland China which management currently monitors. The recoverable amount of the cash-generating unit is determined based on the VIU calculations by using the discounted cash flow method. This method considers the

pre-tax

cash flows of the subsidiaries (cash-generating unit) for the five years ending December 31, 2024 and the projected perpetual cash flows after the fifth year. For the five years ending December 31, 2024, the average growth rate is assumed 1.5% while for the years beyond December 31, 2024, the assumed continual growth rate to perpetuity is 1%. The present value of cash flows is calculated by discounting the cash flow using

pre-tax

interest rates of approximately 11%. The management performed impairment test for the goodwill in relation to the operation in Mainland China and determined such goodwill was not impaired. Reasonably possible changes in key assumptions will not lead to the goodwill impairment loss.