Page 104 - S P Setia Annual Report 2013
P. 104

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





NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2013 (CONT’D)






1. SiGniFicant accOUntinG POlicieS (cOnt’D)

(d) Signifcant accounting judgements and estimates (cont’d)
(ii) Key sources of estimation uncertainty (cont’d)

Depreciation of property, plant and equipment and investment properties

Property, plant and equipment and investment properties are depreciated on a straight-line basis to write off their costs to their
residual values over their estimated useful lives. Management estimates the useful lives of these assets to be within 3 to 50 years
for property, plant and equipment and 50 to 96 years for investment properties.
The carrying amounts of the Group’s and the Company’s property, plant and equipment as at 31 October 2013 were RM121,856,000
and RM83,000 (2012 : RM77,315,000 and RM144,000), respectively.

The carrying amounts of the Group’s and the Company’s investment properties as at 31 October 2013 were RM1,013,046,000 and
RM1,759,000 (2012 : RM602,310,000 and RM1,769,000), respectively.

Changes in the expected level of usage, physical wear and tear and technological development could impact the economic useful
lives and residual values of these assets, and therefore future depreciation charges could be revised.

Provision for stock obsolescence and inventories write down
Inventories are stated at the lower of cost and net realisable value. The Group estimates the net realisable value of inventories
based on an assessment of expected sales prices.

Inventories are reviewed on a regular basis and the Group will make a provision for excess or obsolete inventories based primarily
on historical trends and management estimates of expected and future product demand and related pricing.

The carrying amounts of the Group’s inventories as at 31 October 2013 were RM43,244,000 (2012 : RM23,552,000).

Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s
products, the Group might be required to reduce the value of its inventories and additional provisions for slow moving inventories
may be required.

Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a fnancial asset is impaired. To determine
whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or signifcant
fnancial diffculties of the debtor and default or signifcant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash fows are estimated based on historical loss
experience for assets with similar credit risk characteristics.
The carrying amount of the Group’s and Company’s trade and other receivables as at 31 October 2013 were RM1,032,992,000 and
RM2,898,007,000 (2012 : RM700,953,000 and RM2,289,628,000), respectively.

Impairment of non-fnancial assets
The Group assesses whether there are any indicators of impairment for all non-fnancial assets at each reporting date. Non-
fnancial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value
in use calculations are undertaken, management must estimate the expected future cash fows from the asset or cash generating
unit and choose a suitable discount rate in order to calculate the present value of those cash fows.
   99   100   101   102   103   104   105   106   107   108   109