Page 103 - S P Setia Annual Report 2013
P. 103

Annual Report 2013 S P SETIA BERHAD GROUP Financial Statements | 101



1. SiGniFicant accOUntinG POlicieS (cOnt’D)

(d) Signifcant accounting judgements and estimates

The preparation of fnancial statements requires management to exercise judgement in the process of applying the accounting policies.
It also requires the use of accounting estimates and assumptions that affect reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the reporting date, and reported amounts of income and expenses during the fnancial year.

Although these estimates are based on management’s best knowledge of current events and actions, historical experiences and various
other factors, including expectations for future events that are believed to be reasonable under the circumstances, actual results may
ultimately differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods affected.

(i) Critical judgement made in applying accounting policies
The following are judgements made by management in the process of applying the Group’s accounting policies that have the most
signifcant effect on amounts recognised in the fnancial statements:
Classifcation between investment properties and owner-occupied properties

The Group determines whether a property qualifes as an investment property, and has developed certain criteria based on FRS
140 Investment Property in making that judgement.

In making its judgement, the Group considers whether a property generates cash fows largely independently of other assets held
by the Group. Owner-occupied properties generate cash fows that are attributable not only to the property, but also to other
assets used in the production or supply process.

Some properties comprise a portion that is held to earn rental or for capital appreciation and another portion that is held for use
in the production or supply of goods and services or for administrative purposes.

If these portions could be sold separately (or leased out separately under a fnance lease), the Group accounts for the portions

If the portions could not be sold separately, the property is accounted for as an investment property only if an insignifcant portion
is held for use in the production and supply of goods and services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so signifcant that a property does
not qualify as an investment property.

(ii) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources associated with estimation uncertainty at the reporting date that
have a signifcant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fnancial
period are discussed below:
   98   99   100   101   102   103   104   105   106   107   108