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160Notes to the Financial Statements for the Financial year ended 31st March, 2011Defined contribution plansDefined contribution plans are post-employment benefit plans under which the company pays fixed contributions into separate entities such as theCentral Provident Fund on a mandatory, contractual or voluntary basis. The company has no further payment obligations once the contributions havebeen paid.o) Government grantsJob Credit SchemeCash grants received from the government in relation to the Job Credit Scheme are recognized as income when there is reasonable assurance thatthe grant will be received.3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTSThe presentation of financial statements in conforming with FRS requires the use of certain critical accounting estimates, assumptions and judgementsin applying the accounting policies. These estimates, assumptions and judgements are continually evaluated and are based on historical experience andother factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from theseestimates. The following are the significant accounting estimates, assumptions and judgements that have the most significant effect for preparation offinancial statements:(a)(b)(c)(d)Depreciation of plant and equipmentThe company depreciates the plant and equipment, using the straight-line method, over their estimated useful lives after taking into account oftheir estimated residual values. The estimated useful life reflects management’s estimate of the periods that the company intends to derive futureeconomic benefits from the use of the company’s plant and equipment. The residual values reflect management’s estimated amount that thecompany would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, as if the asset were already of the ageand in the condition expected at the end of its useful life. The carrying amounts of the company’s plant and equipment as at the end of each reportingperiod were disclosed in Note 8 to the financial statements.Impairment of loans and receivablesManagement reviews its loans and receivables for objective evidence of impairment at each reporting period. Significant financial difficulties of thedebtor, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that areceivable is impaired. In determining this, management makes judgement as to whether there is observable data indicating that there has beena significant change in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the technological,market, economic or legal environment in which the debtor operates in.Where there is objective evidence of impairment, management makes judgements as to whether an impairment loss should be recorded as anexpense. In determining this, management uses estimates based on historical loss experience for assets with similar credit risk characteristics. Themethodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differencesbetween the estimated loss and actual loss experience.Impairment of financial assets, available-for-saleThe company follows the guidance of FRS 39 in determining when an available-for-sale financial asset is considered impaired at least annually. Thisdetermination requires significant judgement.Significant or prolonged declines in the fair value of the security below its cost and the disappearance of an active trading market for the securityare considered objective evidence that a financial asset is impaired. In determining this, management evaluates, among other factors, the durationand extent to which the fair value of a financial asset is less than its cost, the financial health of and the near-term business outlook of the issuerof the instrument, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. Fairvalue gains of US$6,779 (2010 : US$142,292) was transferred for the year ended 31st March, 2011 (Note 9).Income taxesJudgement is involved in determining the company’s provision for income taxes. The company recognises liabilities for expected tax issues basedon estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initiallyrecognized, such differences will impact the income tax and deferred tax provision in the financial year in which such determination is made. At31st March, 2011, the carrying amounts of the company’s current income tax payable and deferred tax liability are disclosed in the statement financialposition.