Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

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.)
(f) Deferred tax assets (contd.)
Assumptions about generation of future taxable profi ts depend on management’s estimates of
future cash fl ows. These depend on estimates of future production and sales volume, operating
costs, capital expenditure, dividends and other capital management transactions. Judgement is
also required about application of income tax legislation. These judgements and assumptions are
subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter
expectations, which may impact the amount of deferred tax assets recognised in the statements
of fi nancial position and the amount of unrecognised tax losses and unrecognised temporary
differences.
The carrying value of deferred tax assets of the Group at 31 December 2011 was RM10,810,000
(2010: RM16,700,000) and the recognised unabsorbed capital allowances, unutilised tax losses,
reinvestment and infrastructure allowances and provisions of the Group was RM33,973,000 (2010:
RM43,398,000) and the unrecognised tax losses, capital allowances and provisions of the Group was
RM103,271,000 (2010: RM118,579,000). If the taxable profi ts of the Group differ by 10% due to the
change in estimates of the Group’s future results from operating activities, the Group’s deferred tax
assets and recognised unabsorbed capital allowances and utilised reinvestment and infrastructure
allowances will vary by RM354,337 and RM1,417,347, respectively.
(g) Employee share options
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. Estimating fair value for sharebased
payment transactions requires determining the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. This estimate also requires determining the most
appropriate inputs to the valuation model including the expected life of the share option, volatility
and dividend yield and making assumptions about them. The assumptions and models used for
estimating fair value for share-based payment transactions, sensitivity analysis and the carrying
amounts are disclosed in Note 38.
(h) Impairment of investment in subsidiaries and interest in associates
The Group assesses whether there is any indication that an investment in subsidiaries and interest in
associates may be impaired at each reporting date.
If indicators are present, these assets are subject to impairment review. The impairment review
comprises a comparison of the carrying amount of the investment and the investment’s estimated
recoverable amount.
Judgements made by management in the process of applying the Group’s accounting policies in
respect of investment in subsidiaries and interest in associates are as follows:
(i) The Group determines whether its investments are impaired following certain indications
of impairment such as, amongst others, prolonged shortfall between market value and carrying
amount, signifi cant changes with adverse effects on the investment and deteriorating fi nancial
performance of the investment due to observed changes and fundamentals.
Annual Report 2011 103