SCC Holdings Berhad Annual Report 2018

SCC Holdings Berhad | Annual Report 2018 46. NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2018 (CONT’D) 2. Basis of Preparation (cont’d) (c) Significant accounting judgements, estimates and assumptions (cont’d) Key sources of estimation uncertainty (cont’d) Impairment of trade receivables The Group reviews the recoverability of its receivables at each reporting date to assess whether an impairment loss should be recognised. The impairment provisions for receivables are based on assumptions about risk of default and expected loss rates. The customer’s credit worthiness is evaluated by reviewing, amongst others, the Group’s historical collection experience. The carrying amounts at the reporting date for trade receivables are disclosed in Note 9 to the financial statements. Determination of transaction prices The Group is required to determine the transaction price in respect of each of its contracts with customers. In making such judgment the Group assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any non-cash consideration in the contract. In determining the impact of variable consideration, the Group uses the expected value method, whereby the transaction price is determined by reference to the sum of probability-weighted amounts in a range of possible consideration amounts. There is no significant financing as the period between the transfer of control of good or service to a customer and the payment date is always less than one year, and no non-cash consideration noted in the contracts with customers. Income taxes Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these tax matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 December 2018, the Group has approximate tax recoverable and payable of RM126,000 (2017: RM107,000) and RM901,000 (2017: RM575,000) respectively. Customer loyalty programme The Group operates a customer loyalty programme that provide points awards to customers based on accumulated purchase made which entitled to redeem gift. A portion of the revenue attributable to the awards of point for is deferred until they are utilised or expired. The deferment of the revenue is estimated based on historical trends of breakage upon redemption, which is then used to project the expected utilisation of these benefits. As at 31 December 2018, no deferral revenue had been recognised as the customer loyalty programme was ended during the financial year.