84 / 168
Datasonic Group Berhad
(Company No. 809759-X)
82
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 March 2016
(Continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
(c) Impairment of Non-Financial Assets
When the recoverable amount of an asset is determined based on the estimate of the
value in use of the cash-generating unit to which the asset is allocated, themanagement is
required tomake an estimate of the expected future cash flows from the cash-generating
unit and also to apply a suitable discount rate in order to determine the present value of
those cash flows.
(d) Amortisation of Development Expenditures
Changes in the expected level of usage and technological development could impact
the economic useful lives and therefore, future amortisation charges could be revised.
(e) Write-down of Inventories and Projects-in-progress
Reviews aremade periodically by management on damaged, obsolete and slow-moving
inventories and projects-in-progress. These reviews require judgement and estimates.
Possible changes in these estimates could result in revisions to the valuation of inventories
and projects-in-progress.
(f) Impairment of Trade and Other Receivables
An impairment loss is recognised when there is objective evidence that a financial asset
is impaired. Management specifically reviews its loans and receivables financial assets
and analyses historical bad debts, customer concentrations, customer creditworthiness,
current economic trends and changes in the customer payment terms when making a
judgement to evaluate the adequacy of the allowance for impairment losses. Where
there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience for assets with similar credit risk characteristics.
If the expectation is different from the estimation, such difference will impact the carrying
value of receivables.
(g) Impairment of Available-for-sale Financial Assets
The Group reviews its available-for-sale financial assets at the end of each financial year
to assess whether they are impaired. The Group also records impairment loss on available-
for-sale equity investments when there has been a significant or prolonged decline in
the fair value below their cost. The determination of what is “significant” or “prolonged”
requires judgement. In making this judgement, the Group evaluates, among other factors,
historical share price movements and the duration and extent to which the fair value of
an investment is less than its cost.
(h) Classification of Leasehold Land
The classification of leasehold land as a finance lease or an operating lease requires the
use of judgement in determining the extent to which risks and rewards incidental to its
ownership lie. Despite the fact that there will be no transfer of ownership by the end of
the lease term and that the lease term does not constitute the major part of the indefinite
economic life of the land, management considers that the present value of the minimum
lease payments approximates the fair value of the land at the inception of the lease.
Accordingly, management is of the view that the Group has acquired substantially all
the risks and rewards incidental to the ownership of the land through a finance lease.