EXCEL FORCE MSC BERHAD Annual Report 2018

85 ANNUAL REPORT 2018 5. Capital Work-In-Progress Group and Company 2018 2017 RM RM At 1 January - - Addition 8,384,910 - At 31 December 8,384,910 - During the financial year, the Company has entered into a Sale and Purchase Agreement with Cosmopolitan Avenue Sdn. Bhd. to purchase a building for a purchase consideration of RM9,864,600. 6. Product Development Costs Group Company 2018 2017 2018 2017 RM RM RM RM Cost At 1 January 23,973,983 21,314,043 20,661,911 18,284,861 Additions 2,762,433 2,659,940 2,491,022 2,377,050 At 31 December 26,736,416 23,973,983 23,152,933 20,661,911 Accumulated amortisation At 1 January 13,542,805 11,481,974 11,852,497 10,363,465 Charge for the financial year 2,103,599 2,060,831 1,581,267 1,489,032 At 31 December 15,646,404 13,542,805 13,433,764 11,852,497 Carrying amount At 31 December 11,090,012 10,431,178 9,719,169 8,809,414 (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 was determined by discounting the future cash flows expected 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 2% to 6% (2017: 4% to 9%) per annum from 2019 to 2023. (ii) Profit margins were projected based on the historical profit margin achieved or pre-determined profit margin for the products. (iii) A pre-tax discount rate of 4.80% (2017: 4.80%) 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 2018 (cont’d)