FORGING AHEAD - Tradewinds Plantation Berhad

148
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2010
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
6.2 Key sources of estimation uncertainty (continued)
(b) Impairment of goodwill on consolidation
The Group tests goodwill for impairment at least annually in accordance with its accounting policy. (See accounting
policy Note 4.9 to the financial statements on impairment of goodwill).
For the purposes of assessing impairment, goodwill is allocated to cash-generating units that are expected to
benefit from the synergies of the business combination in which the goodwill arose.
Significant judgment is required in the estimation of the present value of future cash flows generated by the cash
generating units, which involve uncertainties and are significantly affected by assumptions used and judgment
made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly
affect the results of the Group’s tests for impairment of goodwill. The key assumptions used are disclosed in Note
13 to the financial statements.
(c) Income taxes
Significant judgment is required in determining the capital allowances and deductibility of certain expenses based
on the interpretation of the tax laws and legislations during the estimation of the provision for income taxes. There
are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of
business. The Group recognised liabilities for tax based on estimates of assessment of the tax liability due. Where the
final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax
and deferred income tax provisions, where applicable, in the period in which such determination is made.
(d) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and unabsorbed capital and agriculture allowances
to the extent that it is probable that taxable profits will be available against which the tax losses and capital and
agriculture allowances can be utilised. Significant management judgment is required to determine the amount of
deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together
with future tax planning strategies.
(e) Fair values of borrowings
The fair values of borrowings are estimated by discounting future contractual cash flows at the current market
interest rates available to the Group for similar financial instruments. It is assumed that the effective interest rates
approximate the current market interest rates available to the Group based on its size and its business risk.
TRADEWINDS PLANTATION BERHAD
Annual Report 2010