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Annual Report 2017
151
Notes to the
financial statements
31 march 2017
2.
Significant accounting policies (cont’d.)
2.4 Significant accounting estimate and judgement
Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements.
They affect application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses,
and disclosures made. They are assessed on an on-going basis and are based on experience and other relevant factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, 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)
Classification between investment properties and property, plant and equipment
The Group developed certain criteria in making judgement whether a property qualifies as an investment property.
Investment property is a property held to earn rentals or for capital appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that
is held for use in the production or supply of goods or services or for administrative purposes. If these portions
could be sold separately (or leased out separately under a finance lease), the Group would account for the portions
separately. If the portions could not be sold separately, the property is an investment property only if an insignificant
portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement
is made on an individual property basis to determine whether ancillary services are so significant that a property
does not qualify as investment property.
The Group has sub-let portion of a building but has decided to classify the entire building as property, plant and
equipment as this portion cannot be sold separately and significant portion of the building is held for use in the
production or supply of goods or services or for administrative purposes.
(ii)
Income tax
The Group and the Company are subject to income taxes in Malaysia and other countries. Significant judgement
is required in determining the allowances and deductibility of certain expenses during the estimation of the
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Group and the Company recognise liabilities for anticipated
tax matters 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 recorded, such differences will impact the income tax and
deferred tax provisions in the period in which the determination is made. The Group’s and the Company’s tax
expense for the current financial year is RM34,243,000 (2016: RM31,671,000) and RM3,099,000 (2016: RM820,000)
respectively, as disclosed in Note 10.
(iii) Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences can be utilised. Significant
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 together with future tax planning strategies. The Group’s
deferred tax assets as at 31 March 2017 is RM6,966,000 (2016: RM8,394,000) as disclosed in Note 28.