Sunny Tew

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2007 (Continued)3. Critical accounting judgements and key sources of estimation uncertainty (Continued)Critical judgements made in applying the accounting policies (Continued)Impairment of investments in subsidiariesThe Directors of the Company follow the guidance of FRS 36 – Impairment of Assets, in determining whether investments in subsidiaries are other than temporary impairedrequires the assumption made regarding the duration and extent to which the fair value of an investment is less than its costs and the financial health of and near-termbusiness outlook for the investment, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.Based on the Directors of the Company’s assessment, there is no requirement to provide for any allowance for impairment in value of investments in subsidiaries. TheCompany’s carrying amount of investments in subsidiaries at 30 September 2007 was $6,600,926 (2006:$6,380,866) respectively.Key sources of estimation uncertaintyThe 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 materialadjustment to the carrying amounts of assets and liabilities and reported amounts of revenue and expenses within the next financial year, are discussed below.(i)Depreciation of property, plant and equipmentThese assets are depreciated on a straight-line basis over their estimated useful lives. Directors of the Company estimate the useful lives of these assets to bewithin 3 to 10 years. The carrying amounts of the Group’s and of the Company’s property, plant and equipment as at 30 September 2007 were $13,276,065 (2006:$12,550,330) and $4,657,318 (2006: $4,815,850) respectively. Changes in the expected level of usage and technological developments could impact the economicuseful lives and the residual values of these assets, therefore future depreciation charges could be revised.(ii)Impairment of trade and other receivablesThe Directors establish allowance for doubtful receivables on a case-by-case basis when they believe that payment of amounts owed is unlikely to occur. Inestablishing these allowances, the Directors consider its historical experience and changes to its customers’ financial position. If the financial conditions ofreceivables were to deteriorate, resulting in impairment of their abilities to make the required payments, additional allowances may be required. The carrying amountof trade and other receivables for the Group and Company as at 30 September 2007 was $98,547,379 (2006: $92,132,268) and $93,865,715 (2006: $84,378,916)respectively.HG METAL MANUFACTURING LIMITED ANNUAL REPORT 200757