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E U R O S P O R T S G L O B A L L I M I T E D
Notes to
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Summa r y o f S i gn i f i c an t ac coun t i ng Po l i c i e s ( Con t ’ d )
Warranty Provisions
A provision is made for the estimated cost of product warranties at the time revenue is recognised. The warranty
provision is established based upon best estimates of the amounts necessary to settle future and existing claims
on products sold as of the end of each reporting year. As new products incorporating complex technologies are
continuously introduced, and as regulations and practices may change, changes in these estimates could result in
additional allowances or changes to recorded allowances being required in future periods.
Critical Judgements, assumptions and Estimation uncertainties
The critical judgements made in the process of applying the accounting policies that have the most significant effect
on the amounts recognised in the financial statements and the key assumptions concerning the future, and other key
sources of estimation uncertainty at the end of the reporting year, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities currently or within the next reporting year are discussed
below. These estimates and assumptions are periodically monitored to ensure they incorporate all relevant information
available at the date when financial statements are prepared. However, this does not prevent actual figures differing
from estimates.
Useful lives of property, plant and equipment:
The estimates for the useful lives and related depreciation charges for property, plant and equipment is based on
commercial and other factors which could change significantly as a result of innovations and in response to market
conditions. The depreciation charge is increased where useful lives are less than previously estimated lives, or the
carrying amounts written off or written down for technically obsolete items or assets that have been abandoned. It is
impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that
outcomes within the next reporting year that are different from assumptions could require a material adjustment to
the carrying amount of the balances affected. The carrying amount of the specific asset (or class of assets) at the end
of the reporting year affected by the assumption is $6,571,000.
Impairment of property, plant and equipment:
An assessment is made for the reporting year whether there is any indication that the asset may be impaired. If any
such indication exists, an estimate is made of the recoverable amount of the asset. The recoverable amounts of cash-
generating units if applicable is measured based on the fair value less costs of disposal or value in use calculations. It
is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge,
that outcomes within the next reporting year that are different from assumptions could require a material adjustment
to the carrying amount of the balances affected. The carrying amount of the specific asset or class of assets at the end
of the reporting year affected by the assumption is $23,045,000.
Deposit payments made to automobile manufacturers:
The Group is required by automobile manufacturers to make deposit payments upon placement of orders for new
automobiles from time to time. In the event that such automobile manufacturers are unable to deliver the orders and
the deposit payments are not refunded, fully or partially, an impairment will be required. At the end of the reporting
year, management is of the view that the deposit payment carrying amount approximates the fair value. The carrying
amounts might change materially within the next reporting year but the changes would not arise from assumptions or
other sources of estimation uncertainty at the end of the reporting year. The carrying amount of deposits as discussed
is disclosed in Note 16 on Other Assets.
