Full Annual Report 2006 - Singapore Technologies Engineering

125
Notes to the Financial Statements 31 DECEMBER 2006
(Currency – Singapore dollars unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(z) Changes in accounting policies (continued)
(ii) FRS and INT FRS not yet effective
The Group has not applied the following FRS and INT FRS that have been issued but not yet effective:
EFFECTIVE DATE
(ANNUAL PERIODS
BEGINNING ON OR
AFTER)
FRS 1 : Amendment to FRS 1 (revised), 1 January 2007
Presentation of financial statements
(Capital Disclosures)
FRS 40 : Investment Property 1 January 2007
FRS 107 : Financial Instruments: Disclosures 1 January 2007
INT FRS 107 : Applying the Restatement Approach 1 March 2006
under FRS 29, Financial Reporting in
Hyperinflationary Economics
INT FRS 108 : Scope of FRS 102, Share-based Payment 1 May 2006
INT FRS 109 : Reassessment of Embedded Derivatives 1 June 2006
INT FRS 110 : Interim Financial Reporting and Impairment 1 November 2006
The Group expects that the adoption of the above pronouncements will not have a significant impact on the financial
statements in the period of initial application.
(aa) Significant accounting estimates and judgements
Estimates and assumptions concerning the future are made in the preparation of the financial statements. They affect
the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and
disclosures made. They are assessed on an ongoing basis and are based on experience and relevant factors, including
expectations of future events that are believed to be reasonable under the circumstances.
(i) Key sources of estimation uncertainty
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 are discussed below.
• Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the
value-in-use of the cash-generating units to which the goodwill is allocated. Estimating the value-in-use requires
the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to
choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of
the Group’s goodwill at 31 December 2006 was $494,818,000 (2005: $307,821,000). More details are provided
in Note 11.
• Depreciation of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives.
Management estimates the useful lives of these property, plant and equipment to be within 1 to 60 years. The
carrying amount of the Group’s property, plant and equipment at 31 December 2006 was $952,209,000 (2005:
$475,197,000). Changes in the expected level of usage and technological developments could impact the
economic useful lives and the residual values of these property, plant and equipment, therefore future depreciation
charges could be revised.