169 ANNUAL REPORT 2023 MST GOLF GROUP BERHAD Registration No: 199301009307 (264044-M) 31 2. BASIS OF PREPARATION (CONT’D) 2.6 Significant accounting estimates and judgements (cont’d) 2.6.1 Estimation uncertainties Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below. Useful lives of depreciable assets The management estimates the useful lives of the property, plant and equipment and right-of-use assets to be between 2 to 50 years and reviews the useful lives of depreciable assets at end of each reporting date. The management assesses that the useful lives represent the expected utility of the assets to the Group. Actual results, however, may vary due to change in the expected level of usage and technological developments, which resulting the adjustment to the Group’s assets. The carrying amount of the Group’s property, plant and equipment and right-of-use assets at the reporting period are disclosed in Notes 3 and 4 to the financial statements. Inventories Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, management takes into account the most reliable evidence available at the times the estimates are made. The Group’s core business is subject to economic changes which may cause selling prices to change rapidly, and the Group’s profit to change. The carrying amount of the Group’s inventories at the reporting period is disclosed in Note 9 to the financial statements. Provision for expected credit losses (“ECLs”) of trade receivables The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., customer type, rating and payment patterns). The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the trading sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
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