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Annual Report 2014 | S P SETIA BERHAD GROUP | 119

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(d) Significant accounting judgements and estimates (cont’d)

(ii) Key sources of estimation uncertainty (cont’d)

Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Non-

financial 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 flows from the asset or cash

generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

The carrying amounts of the Group’s non-financial assets as at 31 October 2014 are as disclosed in notes 2, 3, 4, 5, 6, 7, 8 and

14 to the financial statements.

Income taxes

Significant judgement is involved in determining the capital allowances and deductibility of certain expenses during the estimation

of the provision for income tax. There are certain transactions and computations for which the ultimate tax determination is

uncertain during the ordinary course of business.

The Group and the Company recognise liabilities for expected tax issues 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 recognised, such differences

will impact the income tax and deferred tax provisions in the period in which such determination is made.

The carrying amounts of the Group’s and the Company’s tax assets as at 31 October 2014 were RM76,044,000 and RM8,527,000

(2013 (restated): RM29,764,000 and RM62,000), respectively.

The carrying amount of the Group’s tax liabilities as at 31 October 2014 was RM6,206,000 (2013 (restated) : RM41,698,000).

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, unabsorbed capital allowances and unutilised tax

losses to the extent that it is probable that taxable profit will be available in future against which the deductible temporary

differences, capital allowances and tax losses 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 carrying amount of the Group’s and the Company’s recognised and unrecognised deferred tax assets as at 31 October 2014

are disclosed in note 13 to the financial statements.

Revenue recognition of property development activities and construction contracts

The Group recognises property development activities and construction contracts based on the percentage of completion

method. The stage of completion of the property development activities and construction contracts is measured in accordance

with the accounting policies set out in 1(m) and 1(n) below.

Significant judgement is required in determining the percentage of completion, the extent of the development project and

contract costs incurred, the estimated total revenue and total costs and the recoverability of the development project and

contract. In making these judgements, management relies on past experience and the work of specialists.