PRG Holdings Berhad Annual Report 2017

• PRG HOLDINGS BERHAD 102 6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D) (e) Partial disposal of a subsidiary The Group reduced its equity interest in Furnitech Components (Vietnam) Co., Ltd. (“Furnitech”) from 82.01% to 45.06%. The calculation of the gain on partial disposal of RM6,824,000 under FRSs involved the determination of the fair value of the retained equity interest of 45.06% in Furnitech which is also the cost on initial recognition of interest in an associate as Furnitech became an associate of the Group upon the completion of the transaction. Management focused on the accounting treatment for the partial disposal of Furnitech due to its financial significance to the financial statements and the complexity of the related accounting treatment under FRSs as disclosed in Note 9(b)(i) to the financial statements. (f) Impairment assessment of the carrying amounts of costs of investments in subsidiaries and amounts owing by subsidiaries Management used a Value in Use model to compute the present value of forecasted future cash flows for the Cash Generating Units (“CGUs”) to determine if there is any impairment loss required on the cost of invesments in subsidiaries and amounts owing by subsidiaries. Management have focused on the impairment assessment of the carrying amounts of the cost of investments in subsidiaries and the amounts owing by subsidiaries as the process is complex and the determination of whether or not an impairment loss is necessary involved significant judgements and estimates by the Directors about the future results and key assumptions applied to cash flow projections of the CGUs in determining their recoverable amounts. These key assumptions include forecast growth in future revenues and operating profit margins, as well as determining an appropriate pre-tax discount rate and growth rates. N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 3 1 D E C E M B E R 2 0 1 7 ( c o n t ’ d )