Annual Report 2013 - Mainfreight

4 Significant Accounting Judgements, Estimates and Assumptions
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based on experience
and other factors, including expectations of future events that may have an impact on the Group. All judgements, estimates and assumptions
made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from
the judgements, estimates and assumptions and the differences may be material. Significant judgements, estimates and assumptions made
by management in the preparation of these financial statements are outlined below:
(a) Significant Accounting Judgements
Allocation of Goodwill
Goodwill relating to the acquisition of the Wim Bosman Group has been allocated to the single cash generating unit (CGU) being Europe.
(b) Significant Accounting Estimates and Assumptions
Impairment of Goodwill and Intangibles with Indefinite Useful Lives
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount
of the cash‐generating unit(s) to which the goodwill is allocated. No impairment was recognised in the current year in respect of
goodwill. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in note 15.
Share Based Payment Transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined by an external valuer using Black Scholes and binomial models, with
the assumptions detailed in note 25. The accounting estimates and assumptions relating to equity‐settled share‐based payments would
have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and
equity.
Long Service Leave Provision
As discussed in note 2(p), the liability for long service leave is recognised and measured at the present value of the estimated future
cash flows to be made in respect of all employees at balance date. In determining the present value of the liability, attrition rates and
pay increases through promotion and inflation have been taken into account based on past history.
Allowance for Impairment Loss on Trade Receivables
Where receivables are outstanding beyond the normal trading terms, the likelihood of the recovery of these receivables is assessed by
management. Due to the large number of debtors, this assessment is based on supportable past collection history and historical writeoffs
of bad debts, which includes 100% over 180 days. The allowance for impairment loss is outlined in note 11.
Estimation of Useful Lives of Assets
The estimation of the useful lives of assets including intangibles have been based on historical experience as well as lease terms (for
leased equipment), and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year
and considered against the remaining useful life. Adjustments to useful life are made when considered necessary. Depreciation and
amortisation charges are included in note 6.
Estimation of Land Valuation
The Group performs an annual valuation of the land, buildings and leasehold improvements. The fair value is determined by an external
valuer with the assumptions detailed in note 14.
Financial Statements
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