Frontken Berhad Annual Report 2017

94 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2017 12. INVESTMENT IN AN ASSOCIATE (CONT’D) Amount owing by an associate The Group 2017 2016 RM RM Amount owing by an associate - Trade 922,516 943,845 - Non-trade 411,336 419,126 1,333,852 1,362,971 The normal trade credit terms granted to associate range from 30 to 90 days (2016: 30 to 90 days). The non-trade balance is unsecured, interest-free and repayable on demand. The amount owing is to be settled in cash. 13. GOODWILL ON CONSOLIDATION The Group 2017 2016 RM RM At beginning/end of year 33,760,856 33,760,856 Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating unit (“CGU”) that is expected to benefit from that business combination. The carrying amount of the goodwill had been allocated as follows: The Group 2017 2016 RM RM Frontken (East Malaysia) Sdn. Bhd. 805,812 805,812 Ares Green Technology Corporation 24,588,453 24,588,453 TTES Frontken Integrated Services Sdn. Bhd. 8,366,591 8,366,591 33,760,856 33,760,856 The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amount of the CGU is determined from value in use calculation. The key assumptions for the value in use calculation are those regarding the expected changes to pricing and direct costs, growth rates and discount rates during the period. 2017 2016 % % Budgeted gross margin 19 to 46 18 to 39 Growth rates - Year 1 1 to 23 -25 to 3 - Year 2 to 5 1 to 15 1 to 5 Pre-tax discount rates 17 to 18 12 to 14 Notes To The Financial Statements (cont’d)