Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

102
Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
3. Signifi cant accounting judgements and estimates (contd.)
3.2 Key sources of estimation uncertainty (contd.)
(c) Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a fi nancial
asset is impaired. To determine whether there is objective evidence of impairment, the Group
considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor
and default or signifi cant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash fl ows are
estimated based on historical loss experience for assets with similar credit risk characteristics. The
carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 24.
If the present value of estimated future cash fl ows varies by 10% from management’s estimates, the
Group’s allowance for impairment will increase by RM1,027,189 (2010: RM3,582,663).
(d) Property development
The Group recognises property development revenue and expenses in the statement of comprehensive
income by using the stage of completion method. The stage of completion is determined by the
proportion that property development costs incurred for work performed to date bear to the estimated
total property development costs.
Signifi cant judgement is required in determining the stage of completion, the extent of the property
development costs incurred, the estimated total property development revenue and costs, as well as
the recoverability of the property development costs. In making the judgement, the Group evaluates
based on past experience and by relying on the work of specialists.
The carrying amounts of assets and liabilities of the Group arising from property development
activities are disclosed in Note 15. A 10% difference in the estimated total property development
revenue or costs would result in approximately 1.01% (2010: 1.62%) variance in the Group’s revenue
and 1.29% (2010: 2.12%) variance in the Group’s cost of sales.
(e) Construction contracts
The Group recognises contract revenue based on percentage of completion method. The stage
of completion is measured by reference to either the costs incurred to-date to the estimated total
cost or the completion of a physical proportion of work to-date. Signifi cant judgement is required
in determining the stage of completion, the extent of the costs incurred and the estimated total
revenue (for contracts other than fi xed contracts) and costs. Total contract revenue also includes an
estimation of the variation works that are recoverable from the customers. In making the judgement,
the Group relies on past experience and work of specialists. The carrying amount of the Group’s
construction contracts is shown in Note 26. A 10% difference in the estimated total contract revenue
or costs would results in approximately 0.58% (2010: 0.66%) variance in the Group’s revenue and
0.72% (2010: 0.54%) variance in the Group’s cost of sales.
(f) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that
taxable profi t will be available against which the losses can be utilised. Signifi cant management
judgement is required to determine the amount of deferred tax assets that can be recognised, based
on the likely timing and level of future taxable profi ts together with future tax planning strategies.
Cahya Mata Sarawak Berhad