GOING
THE DISTANCE
EUROSPORTS
GLOBAL
.72
NOT E S TO T HE
F I NANC I A L S TAT EMEN T S
YEAR ENDED
31 MARCH, 2016
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION (CONT’D)
2B.
Critical judgements, assumptions and estimation uncertainties (cont’d)
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 the Note on other assets.
Allowance for doubtful trade and other receivables
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.
Finance and operating leases
The group as lessor has certain automobiles that are under three to five years leases to lessees. Judgement is used in
determining lease classification into operating leases or finance leases. The titles to the automobiles do not pass to
the lessees at the end of the lease terms. The present value of the minimum lease payments is not greater than nor
equal to substantially all of the fair value of the automobiles concerned. As substantially all the risks and rewards of
the automobiles are with the group based on these qualitative factors the leases have been accounted as operating
leases. The carrying amount of automobiles in property, plant and equipment at the end of the reporting year was
$4,645,000. The operating lease income commitments are included in Note 27.
