MITRA-AnnualReport2011 (1.2MB).pdf - Announcements - Bursa ...

Notes to The Financial Statements (cont’d)
3. SIGNIfICANT ACCoUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates
could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected
in the future.
3.1 Judgements Made in Applying Accounting policies
There were no significant judgements made by management in the process of applying the Group’s accounting
policies which have material effect on the amounts recognised in the financial statements.
3.2 key Sources of Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
(i) Useful lives of property, plant and Equipment
The cost of property, plant and machinery is depreciated on a straight-line basis over the assets’ useful
lives. Management estimates the useful lives of these property, plant and machinery to be within 3 to 50
years. These are common life expectancies applied in the industry. Changes in the expected level of usage
and technological developments could impact the economic useful lives and the residual values of these
assets, therefore future depreciation charges could be revised.
(ii) Impairment of Goodwill
The Group determines whether goodwill is impaired on an annual basis. This requires an estimation of the
value-in-use of the cash-generating units (“CGU”) to which goodwill is allocated. Estimating a value-in-use
amount requires management to make an estimate of the expected future cash flow from the CGU and also
choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of
the carrying value, the key assumptions applied in the impairment assessment of goodwill are given in Note
9.
As at the end of the reporting period, the Directors of the Company are of the opinion that there is no
adjustment required resulting from the impairment review.
(iii) Impairment of loans and Receivables
The Group assesses at the end of each reporting period whether there is any objective evidence that a
financial asset is impaired. To determine whether there is objective evidence of impairment, the Group
considers factors such as the probability of insolvency or significant financial difficulties of the debtor and
default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated
based on historical loss experience for assets with similar credit risk characteristics. The carrying amount
of the Group’s loans and receivables at the end of the reporting period is disclosed in Note 13.
(iv) property Development
The Group recognises property development revenue and expenses in the profit or loss by using the stage
of completion method. The stage of completion is determined by the proportion that property development
costs incurred to date bear to the estimated total property development costs and taking into consideration
the actual sales made against the total estimated gross development value of the project.
MITRAJAYA HOLDINGS BERHAD ANNUAL REPORT 2011
61