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FINANCIAL REPORTS
133
Bursa Malaysia •
Annual Report 2015
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2015
2. Significant accounting policies (cont’d.)
2.5 Significant accounting judgements and estimates
Key sources of estimation uncertainty
The preparation of financial statements in accordance with MFRSs requires the use of certain accounting estimates and exercise of judgement.
Estimates and judgements are continually evaluated and are based on past experience, reasonable expectations of future events and other
factors.
The key assumptions concerning the future and other key sources of estimation uncertainty at the financial year end, that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below:
(a) Impairment of computer hardware and software
The Group and the Company review its computer hardware and software at each financial year end to determine if there is any indication
of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss. The
Group and the Company carry out the impairment test based on a variety of estimations including value-in-use of the CGUs to which the
computer hardware and software are allocated to. Estimating the value-in-use requires the Group and the Company 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 amounts of computer hardware and software as at the financial year end are disclosed in Notes 12 and 13 respectively.
(b) Impairment of goodwill
The Group and the Company determine whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-
in-use of the CGUs to which goodwill is allocated. Estimating a value-in-use amount 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 the financial year end is disclosed in Note 14.
(c) Impairment of investment securities
The Group and the Company review its investment securities and assess at each financial year end whether there is any objective evidence
that the investment is impaired. If there are indicators or objective evidence, the investment securities are subject to impairment review.
The impairment review comprises the following judgements made by management:
(i) Determination whether its investment security is impaired following certain indicators such as, amongst others, prolonged decline in
fair value, significant financial difficulties of the issuer or obligors, the disappearance of an active trading market and deterioration of
the credit quality of the issuers or obligors.
(ii) Determination of the “significant” or “prolonged” criteria requires judgement and management evaluation on various factors, such as
historical fair value movement and the significant reduction in fair value.
The carrying amount of investment securities as at the financial year end are disclosed in Note 16.