ANNUAL REPORT
2016
.71
NOTES TO THE
FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION (CONT’D)
2A.
Significant accounting policies (cont’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.
2B.
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 $7,830,000.
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 $24,317,000.
