ANNUAL REPORT 2016
48
Techno
Dex
Berhad
(627634-A)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
(a) Depreciation of Property, Plant and Equipment
The estimates for the residual values, useful lives and related depreciation charges for the property, plant
and equipment are based on commercial factors which could change significantly as a result of technical
innovations and competitors’ actions in response to the market conditions. The Group anticipates that
the residual values of its property, plant and equipment will be insignificant. As a result, residual values
are not being taken into consideration for the computation of the depreciable amount. Changes in the
expected level of usage and technological development could impact the economic useful lives and the
residual values of these assets, therefore future depreciation charges could be revised.
(b) Income Taxes
There are certain transactions and computations for which the ultimate tax determination may be different
from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing
tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the
final outcome of these matters is different from the amounts that were initially recognised, such difference
will impact the income tax and deferred tax provisions in the year in which such determination is made.
(c) Impairment of Non-Financial Assets
When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the
cash-generating unit to which the asset is allocated, the management is required to make an estimate of
the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate
in order to determine the present value of those cash flows.
(d) Amortisation of Intangible Assets
Changes in the expected level of usage and technological development could impact the economic
useful lives and therefore, future amortisation charges could be revised.
(e) Impairment of Trade and Other Receivables
An impairment loss is recognised when there is objective evidence that a financial asset is impaired.
Management specifically reviews its loans and receivables financial assets and analyses historical bad
debts, customer concentrations, customer creditworthiness, current economic trends and changes in
the customer payment terms when making a judgment to evaluate the adequacy of the allowance
for impairment losses. 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. If the expectation is different from the estimation, such difference will impact the carrying
value of receivables.
(f) Impairment of Goodwill
Goodwill is tested for impairment annually and at other times when such indicators exist. This requires
management to estimate the expected future cash flows of the cash-generating unit to which goodwill
is allocated and to apply a suitable discount rate in order to determine the present value of those cash
flows. The future cash flows are most sensitive to budgeted gross margins, growth rates estimated and
discount rate used. If the expectation is different from the estimation, such difference will impact the
carrying value of goodwill.
NOTES TO THE
FINANCIAL STATEMENTS
(continued)
