Elpitiya Plantations Plc Annual Report 2010/11 - Colombo Stock ...

Notes to the Financial Statements
Year Ended 31 st March 2011
Inventory valuation – Produce stock
Company has valued part of unsold produce stock at since realized prices. The balance unsold stock remained as at the
balance sheet date valued at an estimated selling prices based on most recent selling prices available subsequent to the year
end.
Estimates and Assumptions
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 adjustments to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Impairment of Goodwill
The company 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 a value in use amount requires management
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 present value of those cash flows. However, at present company does not have any recorded
Goodwill balance as at the balance sheet date.
Deferred Tax Assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred
tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax
planning strategies. The carrying value of the unrecognised deferred tax assets at 31 March 2011 was Rs.188,650,437/-
(2010. Rs. 471,116,273/-).
Defined Benefit Plans
The cost of defined benefit pension plan is determined using actuarial valuations. The actuarial valuation involves making
assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future
pension increases. Due to the long term nature of these plans, such estimates are subject to significant uncertainty. The net
employee liability at 31 March 2011 is Rs. 464,154,667/- (2010 Rs. 448,410,122/-). Further details are given in Note 13.
2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.3.1 Foreign Currency Translation
The financial statements are presented in Sri Lankan rupees, which is the Company’s functional and presentation currency.
Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange
ruling at the balance sheet date. All differences are taken to profit or loss with the exception of differences on foreign currency
borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal
of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange
differences on those borrowings are also dealt with in equity. Non monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was
determined. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and
translated at the closing rate.
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