ANNUALREPORT 2013
89
Notes to theFinancial Statements
(Cont’d)
5) CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATIONUNCERTAINTY
Thepreparationof financial statements inconformitywithMFRS requires theuseof certaincritical
accountingestimates andassumptions that affect the reportedamounts of assets and liabilities,
anddisclosureof contingent assetsand liabilitiesat thedateof the financial statements, and the
reported results during the reportedperiod. It also requires directors toexercise their judgement
in the process of applying theGroup’s and the Company’s accounting policies. Although these
estimatesand judgementarebasedon thedirector’sbestknowledgeofcurrenteventsandactions,
actual resultsmay differ.
Critical judgements in applying theGroup’s and theCompany’s accountingpolicies
In theprocessofapplying theGroup’sand theCompany’saccountingpolicies,whicharedescribed
in Note 4 above, management is of the opinion that there are no instances of application of
judgementwhichareexpected tohavesignificanteffecton theamounts recognised in thefinancial
statements.
Key sourcesof estimationuncertainty
Management believes that thereareno keyassumptionsmade concerning the future, andother
key sourcesof estimationuncertaintyat the reportingdate, that havea significant riskof causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial
year other than as follows:
(i) Property, plant andequipment anddepreciation
TheGroup determines the estimated useful lives and related depreciation charges for the
Group’s property, plant andequipment. Theestimate is basedon thehistorical experience
of the actual useful lives of property, plant and equipment of similar nature and function.
Management will revise the depreciation charge where useful lives are different to those
previously estimated, or it will write off or write down technically obsolete or non strategic
assets that have been abandoned or sold.
(ii) Impairment on receivables
TheGroupassesses at each reportingdatewhether there is any objectiveevidence that a
financial asset is impaired.Todeterminewhether there isobjectiveevidenceof impairment,
the Group considers factors such as the probability of insolvency or significant financial
difficultiesof thedebtoranddefaultorsignificantdelay inpayments.Where there isobjective
evidence of impairment, the amount and timing of future cash flows are estimated based
onhistorical loss experience for assetswith similar credit risk characteristics. The carrying
amount of theGroup’s loans and receivables at the reporting date is disclosed inNote 11
to theFinancial Statements.
(iii) Estimated impairment of goodwill and intangible assets
TheGroupdetermineswhether goodwill and intangibleassetshavebeen impairedat least
on an annual basis. The recoverable amounts of the cash-generating units (“CGU”) are
determined basedon the value-in-usemethod. Estimating a value-in-use amount requires
management to make an estimate of the expected future cash flows from the CGU and
also tochooseasuitablediscount rate inorder tocalculate thepresent valueof thosecash
flows.
