NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
(cont’d)
E X C E L F O R C E M S C B E R H A D • A N N U A L R E P O R T 2 0 1 4
72
8.
PRODUCT DEVELOPMENT COSTS (cont’d)
(a) Product development costs comprise salaries of personnel involved in the development and design
of products prior to the commencement of commercial production.
(b) For the purpose of impairment testing, the recoverable amount in the Cash Generating Units (‘CGUs’)
is determined based on their value in use. The value in use is determined by discounting the future cash
flows to be generated from the continuing use of the CGUs based on financial budgets prepared by
management covering a five (5) year period.
The key assumptions used in the value in use calculations are as follows:
(i) The anticipated average annual revenue growth rates used in the cash flow budgets and plans
of the CGUs ranged from 10% to 57% per annum for years 2015 to 2019.
(ii) Profit margins are projected based on the historical profit margin achieved or predetermined
profit margin for the products.
(iii) A pre-tax discount rate of 9.70% per annum has been applied in determining the recoverable
amount of the CGUs.
Based on these assumptions, the Directors are of the view that no impairment loss is required as the
recoverable amount determined is higher than the carrying amount of the CGUs.
(c) Sensitivity to changes in assumptions
The management believes that a reasonable possible change in the key assumptions on which
management has based its determination of the CGUs’ recoverable amount would not cause the
CGUs’ carrying amount to exceed its recoverable amount.
9.
GOODWILL ON CONSOLIDATION
Balance
as at
1.1.2014
Acquisition
of a subsidiary
(Note 34)
Amortisation
charge for the
financial year
Balance
as at
31.12.2014
RM
RM
RM
RM
Group
2014
Carrying amount
Goodwill
-
32,528
-
32,528
-
32,528
-
32,528
[---------------As at 31.12.2014-------------]
Cost
Accumulated
impairment
Carrying
Amount
RM
RM
RM
Goodwill
32,528
-
32,528
32,528
-
32,528
