196 NOTES TO THE FINANCIAL STATEMENTS ʹˢ˥ ˧˛˘ Ѓˡ˔ˡ˖˜˔˟ ˬ˘˔˥ ˘ˡ˗˘˗ ʦʤ ʷ˘˖˘ˠ˕˘˥ ʥʣʥʧ (cont’d) 2. BASIS OF PREPARATION (CONT’D) (c) Significant accounting judgements, estimates and assumptions (cont’d) Key sources of estimation uncertainty (cont’d) Determination of transaction prices (cont’d) The Group’s credit sales provide its customers with a significant benefit of financing the goods and services sold. Where the period between the transfer of control of good and service to a customer and payment by the customer exceeds a year, the Group adjusts the transaction price with its customer and recognises a financing component. Significant judgements are used to estimate the discount rate applied in adjusting the transaction price of credit sales, the Group uses a discount rate that would reflect that of a separate financing transaction between the Group and its customer at contract inception. In making these estimates, management evaluated, among other factors, the difference between the amount of promised consideration and the cash selling price, the duration of the financing provided and market observable borrowing rates. Provision for expected credit loss of financial assets at amortised cost The Group reviews the recoverability of its receivables at each reporting date to assess whether an impairment loss should be recognised. The impairment provisions for receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the payment profiles of past sales, the corresponding historical credit losses and adjusts for qualitative and quantitative reasonale and supportable forward-looking information at the end of each reporting period. The Group uses a provision matrix to calculate expected credit loss for trade and other receivables. The provision rates are based on number of days past due. 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. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and expected credit loss is a significant estimate. The carrying amounts at the reporting date for receivables are disclosed in Notes 12, 14, 15, 16, 17 and 18 to the financial statements respectively. Fair value estimates for investment in unquoted shares The Group carries certain financial assets that are not traded in an active market at fair value. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The amount of fair value changes would differ if the Group uses different valuation methodologies and assumptions, and eventually affect profit and/or other comprehensive income. The carrying amounts of these financial assets as at the reporting date are disclosed in Note 11 to the financial statements. Income taxes Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 December 2024, the Group has tax recoverable and payable of RM2,174,000 (2023: RM1,188,000) and RM13,000 (2023: RM22,000) respectively. The Company has tax payable of RM13,000 (2023: RM22,000).
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