Frontken Berhad Annual Report 2017

95 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2017 13. GOODWILL ON CONSOLIDATION (CONT’D) The calculation of value-in-use for CGU are most sensitive to the following assumptions: (i) Budgeted gross margin Management determines budgeted gross margin based on past performance and its expectations of market development. (ii) Growth rates The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. These calculations use pre-tax cash flow projections based on financial budgets approved by management and extrapolated cash flows for a five-year period based on growth rates consistent with the long-term average growth rate for the industry. (iii) Discount rates Management estimates discount rate using pre-tax rate that reflect current market assessments of the time value of money and the risk specific to the CGU. The rate used to discount the forecasted cash flows reflects specific risks and expected returns relating to the industry.  (iv) Terminal value Terminal value is based on zero growth of projected present value of particular subsidiaries from year 2022 until infinity. The management believes that there is no reasonable change in the above key assumptions which would cause the carrying amount of the goodwill to exceed its recoverable amounts. 14. DEFERRED TAX ASSETS/LIABILITIES The Group 2017 2016 RM RM Deferred tax assets At beginning of year 1,602,804 1,405,844 Transfer from profit or loss (Note 8) 73,771 - Transfer to other comprehensive expenses 35,072 95,966 Foreign currency translation differences (30,327) 100,994 At end of year 1,681,320 1,602,804 Deferred tax liabilities At beginning of year 1,671,539 3,446,164 Transfer to profit or loss (Note 8) (536,091) (1,775,922) Foreign currency translation differences (12,687) 1,297 At end of year 1,122,761 1,671,539 The net deferred tax liabilities and assets are in respect of the tax effects of the following: The Group Deferred Tax (Assets)/Liabilities 2017 2016 RM RM Temporary differences arising from property, plant and equipment 994,307 1,477,470 Others (1,552,866) (1,408,735) (558,559) 68,735 Notes To The Financial Statements (cont’d)