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Notes to the
Financial Statements
As at 31 March 2019
2.
Significant accounting policies (cont’d.)
2.4 Significant accounting judgements and estimates
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) 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 2019 was RM12,710,000 (2018: RM12,710,000). Further
details are disclosed in Note 18.
(ii) Inventories
In determining the costing of inventories, management’s judgement is required in determining the
basis of finished goods and work-in-progress valuation which comprise costs of raw materials, direct
labour, other direct costs, and the appropriate allocation of overheads based on normal operating
capacity. Further details are disclosed in Note 19.
(iii) 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.
Further details are disclosed in Note 13 and Note 14.
Kumpulan Fima Berhad
(11817-V)
Annual Report 2019
146