85 / 168
Datasonic Group Berhad
(Company No. 809759-X)
83
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)
(i) Impairment of Goodwill
Goodwill is tested for impairment annually and at other times when such indicators
exist. This requires management to estimate the expected future cash flows of the cash-
generating unit to which goodwill is allocated and to apply a suitable discount rate in
order to determine the present value of those cash flows. The future cash flows are most
sensitive to budgeted gross margins, growth rates estimated and discount rate used. If
the expectation is different from the estimation, such difference will impact the carrying
value of goodwill.
(j) Fair Value Estimates for Certain Financial Assets and Financial Liabilities
TheGroup carries certain financial assets and financial liabilities at fair value, which requires
extensive use of accounting estimates and judgement. While significant components of
fair valuemeasurement were determined using verifiable objective evidence, the amount
of changes in fair value would differ if the Group uses different valuation methodologies.
Any changes in fair value of these assets and liabilities would affect profit and/or equity.
4.2 FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using a valuation technique. The
measurement assumes that the transaction takes place either in the principal market or in the
absence of a principal market, in the most advantageous market. For non-financial asset, the
fair valuemeasurement takes into account amarket participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
For financial reporting purposes, the fair value measurements are analysed into level 1 to level
3 as follows:-
Level 1:
Inputs are quoted prices (unadjusted) in active markets for identical assets or liability
that the entity can access at the measurement date;
Level 2:
Inputs are inputs, other than quoted prices included within level 1, that are observable
for the asset or liability, either directly or indirectly; and
Level 3:
Inputs are unobservable inputs for the asset or liability.
The transfer of fair value between levels is determined as of the date of the event or change
in circumstances that caused the transfer.