EXCEL FORCE MSC BERHAD Annual Report 2017

80 4. Property, Plant and Equipment (cont’d) (a) In previous financial year, included in the property, plant and equipment of the Group and the Company are leasehold land and buildings with carrying amount of RM13,666,855, which have been pledged to licensed bank as security for banking facilities granted to the Company as disclosed in Note 16. (b) In previous financial year, the remaining lease period of leasehold land is 54 years. 5. Product Development Costs Group Company 2017 2016 2017 2016 RM RM RM RM Cost At 1 January 21,314,043 19,924,754 18,284,861 16,261,091 Additions 2,659,940 2,475,843 2,377,050 2,023,770 Disposal of subsidiary companies - (1,086,554) - - At 31 December 23,973,983 21,314,043 20,661,911 18,284,861 Accumulated amortisation At 1 January 11,481,974 9,898,806 10,363,465 9,010,612 Charge for the financial year 2,060,831 1,773,670 1,489,032 1,352,853 Disposal of subsidiary companies - (190,502) - - At 31 December 13,542,805 11,481,974 11,852,497 10,363,465 Carrying amount At 31 December 10,431,178 9,832,069 8,809,414 7,921,396 (a) Product development costs comprise salaries of personnel involved in the development and design of products prior to the commencement of commercial production. (b) The Group reviews the carrying amounts of product development costs as at the end of the reporting period to determine whether there is any indication of impairment. If any such indications exists, the recoverable amount of the Cash Generating Unit (“CGU”) is determined based on its value in use. The value in use is determined by discounting the future cash flows to be generated from the continuing use of the CGU based on the financial budgets prepared by the management covering a period of five (5) years. 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 CGU ranged from 4% to 9% (2016: 8% to 44%) per annum from 2018 to 2022. (ii) Profit margins were projected based on the historical profit margin achieved or predetermined profit margin for the products. (iii) A pre-tax discount rate of 4.80% (2016: 4.70%) per annum has been applied in determining the recoverable amount of the CGU. Based on the assessment, the Directors are of the view that no impairment loss is required as the recoverable amount of the CGU is higher than its carrying amount. Notes To The Financial Statements 31 December 2017 (cont’d)