Annual Report 2011 - Goodbaby International Holdings Limited

NOTES TO FINANCIAL STATEMENTS
31 December 2011
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS (Continued)
Estimation uncertainty (Continued)
Impairment of non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for all non-financial assets at
the end of each reporting period. Non-financial assets are tested for impairment when there are
indicators that the carrying amounts may not be recoverable. An impairment exists when the
carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs to sell and its value in use. The calculation of the fair value less
costs to sell is based on available data from binding sales transactions in an arm’s length
transaction of similar assets or observable market prices less incremental costs for disposing of
the asset. When value in use calculations are undertaken, management must estimate the
expected future cash flows from the asset or cash-generating unit and choose a suitable discount
rate in order to calculate the present value of those cash flows.
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
judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future taxable profits together with future tax
planning strategies. Details of unrecognised tax losses as at the end of the reporting period are
contained in note 29.
Provision for impairment of trade and notes receivables
The provision policy for impairment of trade and notes receivables is based on the ongoing
evaluation of the collectability and ageing analysis of the outstanding receivables and on
management’s judgement. A considerable amount of judgement is required in assessing the
ultimate realisation of those receivables, including the credit worthiness and the past collection
history of each customer. If the financial conditions of the customers of the Group and the
Company were to deteriorate, resulting in an impairment of their ability to make payments,
additional allowances might be required. Further details are contained in note 22.
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