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NOTES TO THE FINANCIAL STATEMENTS
31 MARCH 2018
fInanCIal StatementS
2.
Significant accounting policies (cont’d.)
2.4 Significant accounting estimate and judgement (cont’d.)
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) Impairment of goodwill
Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation
of the value-in-use of the CGU to which goodwill is allocated. Estimating a value-in-use requires management to
make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in
order to calculate the present value of those cash flows. The carrying amount of goodwill as at 31 March 2018 was
RM12,710,000 (2017: RM12,710,000). Further details are disclosed in Note 18.
(iii) Provision for warranty
Provision for warranty is based on current volumes of products sold still under warranty and on historic quality
rates as well as estimates and assumptions regarding future quality rates for new products.
Total Group’s provisions for warranty as of 31 March 2018 is RM9,961,000 (2017: RM14,827,000), as disclosed in
Note 33.