ZaraAnnual-English2015

(3) SIGNIFICANT ACCOUNTING JUDGMENT, ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements requires management to make estimates and assumptions that
affect the reported amounts of financial assets and liabilities and disclosure of contingent liabilities. These estimates and
assumptions also affect the revenues, expenses and provisions. In particular, considerable judgment by management is
required in the estimation of the amount and timing of future cash flows when determining the level of provisions required.
Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and
uncertainty and actual results may differ resulting in future changes in such provisions.
Judgments, estimates and assumptions in the consolidated financial statements are detailed below:
- A provision is established for accounts receivable based on basis and assumptions approved by the Group’s management
to estimate the required provision.
- Income tax expense is calculated and charged for the year in accordance with laws and regulation and IFRS. Deferred tax
assets and liabilities and income tax provision are calculated accordingly.
- The management periodically reviews the useful lives of property and equipment in order to calculate the annual
depreciation expense on the general conditions of the property and equipment and estimate the future useful lives
accordingly.
- A provision is established against court cases where the Group is the defendant based on a legal study provided by the
Group’s legal advisor which determines the risk that may occur. These studies are reviewed periodically and the provision
is adjusted accordingly.
Annual Report 2015
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