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

Notes to The Financial Statements (cont’d)
3. SIGNIfICANT ACCoUNTING JUDGEMENTS AND ESTIMATES (CoNT’D)
3.2 key sources of estimation uncertainty (cont’d)
(iv) property Development (cont’d)
Significant 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 these judgements, the Group evaluates based
on past experience and by relying on the work of specialists.
(v) Construction
The Group recognises contract 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 the contract costs incurred for work
performed to date bear to the estimated total contract costs.
Significant judgements is required in determining the stage of completion, the extent of contract costs
incurred, the estimated total contract revenue and costs, as well as the recoverability of the construction
projects. In making the judgement, the Group evaluates based on past experience and by relying on the work
of specialists.
(vi) Income Tax
Judgement is involved in determining the provision for income taxes. There are certain transactions and
computations for which the ultimate tax determination is uncertain during the ordinary course of business.
The Group and the Company recognises liabilities for expected tax liabilities based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts
that were initially recognised, such differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.
(vii) Deferred Tax Assets
Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the
extent that it is probable that taxable profit will be available against which the losses and capital allowances
can be utilised. Management judgement 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.
(viii) Borrowing Cost on Advances to Subsidiary Companies
The Group estimates the borrowing cost on certain advances to subsidiary companies to be charged by
reference to borrowing cost applied to loans from third parties. Details of the interest charged are as
disclosed in Note 14. As at the end of the reporting period, the Directors are of the opinion that the borrowing
cost applied are no less favourable than those arranged with third parties.
(ix) Impairment of Investment properties
The Group assesses at the end of each reporting period whether there is any objective evidence that the
investment properties are impaired. The Group considers internal and external factors such as market price
and latest transacted price of properties within the same vicinity and nature.
The Group assessed the market price of the investment properties based on information available through
internal research and Directors’ best estimates.
Where there is objective evidence, impairment losses are recognised in profit or loss. As at the end of the
reporting period, the Directors of the Company are of the opinion that there is no adjustment required except
for the impairment amounting to approximately RM2.08 million as disclosed in Note 6(c) to the financial
statements.
62 MITRAJAYA HOLDINGS BERHAD ANNUAL REPORT 2011