/ . 7 5
A N N U A L R E P O R T 2 0 1 5
T H E S T R E N G T H O F O U R B R A N D S
2 .
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 )
Critical Judgements, assumptions and Estimation uncertainties (Cont’d)
Allowance for doubtful accounts:
An allowance is made for doubtful trade accounts for estimated losses resulting from the subsequent inability of the
customers to make required payments. If the financial conditions of the customers were to deteriorate, resulting
in an impairment of their ability to make payments, additional allowances may be required in future periods. To the
extent that it is feasible impairment and uncollectibility is determined individually for each item. In cases where that
process is not feasible, a collective evaluation of impairment is performed. At the end of the reporting year, the trade
receivables carrying amount approximates the fair value and the carrying amounts might change materially within the
next reporting year but these changes may not arise from assumptions or other sources of estimation uncertainty at
the end of the reporting year. The carrying amount is disclosed in the Note on Trade and Other Receivables.
Net realisable value of inventories:
A review is made periodically on inventory for excess inventory and declines in net realisable value below cost and
an allowance is recorded against the inventory balance for any such declines. These reviews require management
to consider the future demand for the products. In any case the realisable value represents the best estimate of the
recoverable amount and is based on the acceptable evidence available at the end of the reporting year and inherently
involves estimates regarding the future expected realisable value. The usual considerations for determining the amount
of allowance or write-down include ageing analysis, technical assessment and subsequent events. In general, such an
evaluation process requires significant judgement and materially affects the carrying amount of inventories at the end
of the reporting year. Possible changes in these estimates could result in revisions to the stated value of the inventories.
The carrying amount of inventories at the end of the reporting year is disclosed in the Note on Inventories.
Assessment of impairment of goodwill:
An assessment is made annually whether goodwill has suffered any impairment loss. The assessment process is
complex and highly judgmental and is based on assumptions that are affected by expected future market or economic
conditions. Judgement is required in identifying the cash generating units (“
Cgu
”) and the use of estimates as disclosed
in Note 22.
3 .
re l a t ed Pa r t y re l a t i on s h i p s and Tr an s a c t i on s
FRS 24 defines a related party as a person or entity that is related to the reporting entity and it includes (a) A person or
a close member of that person’s family if that person: (i) has control or joint control over the reporting entity; (ii) has
significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting
entity or of a parent of the reporting entity. (b) An entity is related to the reporting entity if any of the following
conditions apply: (i) The entity and the reporting entity are members of the same Group; (ii) One entity is an associate
or joint venture of the other entity; (iii) Both entities are joint ventures of the same third party; (iv) One entity is a joint
venture of a third entity and the other entity is an associate of the third entity; (v) The entity is a post-employment
benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity; (vi)
The entity is controlled or jointly controlled by a person identified in (a); (vii) A person identified in (a) (i) has significant
influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity);
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the
reporting entity or to the parent of the reporting entity.
The ultimate controlling parties are Goh Kim San and Goh Kim Hup.
