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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
d) Dividend income
Dividend income is recognised when the right to
receive payment is established.
3. Critical accounting estimates and
judgements
3.1 Critical accounting estimates and judgements in
e) Premium income
Income from insurance premiums includes net income
from insurance premiums, calculated on the basis of
gross written premiums accrued in the accounting period,
less the share of gross written premiums ceded to the
reinsurer and adjusted for changes in net unearned
premium reserves.
applying accounting policies
The Group makes estimates and assumptions that
affect the reported amounts of assets and liabilities
within the next financial year. Estimates and
judgements are continually evaluated and based
on historical experience and other factors, including
expectations of future events that are believed to be
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Income from insurance contracts is recognised as
premium income in the following way:
- Income arising from single premium is recognised
when the insurance policy is incepted and bills
charged;
- Income arising from long-term insurance contracts
in which the premium is paid in instalments
(monthly, quarterly, annually) is recognised upon
the recognition of premium receivables.
The premium charged by the Group covers
transaction costs (the fees of concluding the
contract, management and collection) and
represents income in the period of settlement. If
a period of more than one year is concerned, a
portion of the premium is deferred as liability and
transferred to income over the life of the contract.
reasonable under the circumstances.
3.1.1 Estimated impairment of goodwill
The Group annually tests goodwill for potential
impairment in accordance with the accounting
policy stated in Note 2.7. The recoverable amounts
of cash-generating units have been determined
based on value-in-use calculations. These
calculations require the use of estimates.
3.1.2 The ultimate liability arising from claims made
under insurance contracts
The estimation of the ultimate liability arising from claims
made under insurance contracts is the Group’s most
critical accounting estimate. There are several sources of
uncertainty that need to be considered in the estimate
of the liability that the Group will ultimately pay for such
claims. At each balance sheet date, liability adequacy
tests are performed to ensure the adequacy of liabilities.