Annual Report.CDR - Colombo Stock Exchange

S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
8. SEGMENT INFORMATION
8.1. Reporting Segment
A segment is a distinguishable component of the company that is engaged in providing
services (Business segment) or in providing services within a particular economic
environment (Geographical Segment), which is subject to risks and rewards that are
different from those of other segments.
In accordance with the Sri Lanka Accounting Standards No. 28 “Segmental Reporting”,
segmental information is presented in respect of the company. The segments comprise
leasing, hire purchase, investment in fixed deposits with banks, investment in Government
Securities, Real Estate, and other financing products.
Segment results, assets and liabilities include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis.
9. CRITICALACCOUNTING JUDGEMENTSAND KEYSOURCES OFESTIMATION
UNCERTAINTY
In the application of the company's accounting policies, which are described in Note 3 to 7, the
directors are required to make judgments, estimates and assumptions about the carrying amounts
of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered
to be relevant.Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.
9.1. Key Sources of Estimation Uncertainty
The following are the key assumptions concerning the future, and other key sources of
estimation uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial
year.
9.1.1. Profit on Lands sold under easy Payment Facility
Profit on lands sold under easy payment facility is recognized once the easy payment
agreement is signed.
In making their judgment, the directors considered the detailed criteria for the
recognition of revenue from the sale of goods set out in SLAS 29 “Revenue” and, in
particular, whether the company had transferred to the buyer the significant risks and
rewards of ownerships of the lands sold under the easy payment facility. Following
the detailed quantification of the company's loan losses in respect of lands sold under
easy payment, and the agreed limitation on the customer's ability to discontinue the
loan facility, the directors are satisfied that the significant risks and rewards have
been transferred and that recognition of the profit on lands sold under easy payment
facility in the current year is appropriate.
9.1.2. Fall in Value of Investment Securities
The company treats all equity investments as impaired when there has been a
significant or prolonged decline in the fair value below its cost or where other
objective evidence of impairment exists. The determination of what is significant or
'prolonged' requires judgment.
T H E F I N A N C E C O . P L C - A N N U A L R E P O RT 2 0 0 9 - 2 0 1 0
30