FRONTLINE COVER FA 070606 CR2.indd

62
frontline technologies corporation ltd
annual report 2006
> notes to the financial statement
for the year ended 31 march 2006
3. Significant accounting estimates and judgements (cont’d)
(i) Impairment of goodwill and other intangibles
The Group determines whether goodwill and other intangibles are 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 and other
intangibles are 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 and other intangibles at 31
March 2006 was $21,325,893 (2005: $19,963,432).
(ii)
(iii)
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 3 to 21 years.
The carrying amount of the Group’s property, plant and equipment at 31 March 2006 was $9,358,976 (2005:
$8,629,480). Changes in the expected level of usage and technological developments could impact the economic
useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
Income taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in
determining the Group-wide provision for income taxes. There are certain transactions and computations for
which the ultimate tax determination is uncertain during the course of business. The Group recognises 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. The carrying amount
of the Group’s tax payable at 31 March 2006 was $977,448 (2005: $890,723).
4. Revenue
Revenue represents contract revenue and invoiced value of sales, services income, outsourcing income, training
income and commission recognised in the normal course of business as follows:
Group
2006 2005
$ $
IT Infrastructure 90,579,965 95,836,223
IT Outsourcing 61,542,902 44,022,223
IT Consulting and Implementation 16,939,916 7,605,145
169,062,783 147,463,591
Intra-group transactions have been excluded from Group turnover.