143 ANNUAL REPORT 2024 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2024 (cont’d) 4. MATERIAL ACCOUNTING POLICY INFORMATION (CONT’D) 4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D) Key Sources of Estimation Uncertainty (cont’d) (c) Impairment of Investments in Subsidiaries The Company determines whether an item of its investment in subsidiaries is impaired by evaluating the extent to which the recoverable amount of the asset is less than its carrying amount. This evaluation is subject to changes such as market performance, economic and political situation of the country. A variety of methods is used to determine the recoverable amount, such as valuation reports and discounted cash flows. For discounted cash flows, significant judgement is required in the estimation of the present value of future cash flows generated by these assets, which involve uncertainties and are significantly affected by assumptions used and judgements made regarding estimates of future cash flows and discount rates. The carrying amount of investments in subsidiaries as at the reporting date is disclosed in Note 5 to the financial statements. Critical Judgements Made in Applying Accounting Policies Management believes that there are no instances of application of critical judgement in applying the accounting policies of the Group and of the Company which will have a significant effect on the amounts recognised in the financial statements other than as disclosed below:- (a) Lease Terms Some leases contain extension options exercisable by the Group before the end of the non-cancellable contract period. In determining the lease term, management considers all facts and circumstances including the past practice and any cost that will be incurred to change the asset if an option to extend is not taken. An extension option is only included in the lease term if the lease is reasonably certain to be extended (or not terminated). 4.2 FINANCIAL INSTRUMENTS (a) Financial Assets Financial Assets at Amortised Cost The financial assets are initially measured at fair value plus transaction costs except for trade receivables without significant financing component which are measured at transaction price only. Subsequent to the initial recognition, all financial assets are measured at amortised cost less any impairment losses. (b) Financial Liabilities Financial Liabilities at Amortised Cost The financial liabilities are initially measured at fair value less transaction costs. Subsequent to the initial recognition, the financial liabilities are measured at amortised cost. Cumulative Redeemable Non-convertible Preference Shares (“CRNCPS”) and Islamic Medium Term Notes (“IMTN”) are classified as financial liabilities in accordance with the substance of the contractual arrangement of the instruments.
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