FORGING AHEAD - Tradewinds Plantation Berhad

6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
6.2 Key sources of estimation uncertainty (continued)
(f) Write-down for obsolete or slow-moving inventories
The Group writes down its obsolete or slow-moving inventories based on assessment of their estimated net selling
price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts
may not be recoverable. The management specifically analyses sales trend and current economic trends when
making a judgment to evaluate the adequacy of the write-down for obsolete or slow-moving inventories. Where
expectations differ from the original estimates, the differences will impact the carrying amount of inventories.
(g) Impairment of assets
The Group determines whether an asset is impaired by evaluating the extent to which the recoverable amount of an
asset is less than its carrying amount. This evaluation is subject to changes such as market performance, economic
and political situation of the country.
Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value in use.
Value in use is the net present value of the projected future cash flows derived from that asset discounted at an
appropriate discount rate. For such discounted cash flow method, it involves the use of estimated future results and a
set of assumptions to reflect its income and cash flows. Judgment has been used to determine the discount rate for
the cash flows and the future growth of the business.
(h) Impairment of investments in subsidiaries
FINANCIAL STATEMENTS
The Directors review the material investments in subsidiaries for impairment when there is an indication of
impairment.
The recoverable amounts of the investments in subsidiaries are assessed by reference to the value in use of the
respective subsidiaries.
The value in use is the net present value of the projected future cash flows derived from the business operations
of the respective subsidiaries discounted at an appropriate discount rate. For such discounted cash flow method,
it involves the use of estimated future results and a set of assumptions to reflect their income and cash flows.
Judgment has been used to determine the discount rate for the cash flows and the future growth of the businesses
of the subsidiaries.
TRADEWINDS PLANTATION BERHAD
Annual Report 2010
149