NOTES TO THE FINANCIAL STATEMENTS
For The Financial Period From 1 January 2014 To 31 March 2015 (Cont’d)
65
Datasonic Group Berhad
(Company No. 809759-X)
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
4.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
(g) Impairment of Available-for-sale Financial Assets
The Group reviews its available-for-sale financial assets at the end of each financial year
to assess whether they are impaired. The Group also records impairment loss on available-
for-sale equity investments when there has been a significant or prolonged decline in
the fair value below their cost. The determination of what is “significant” or “prolonged”
requires judgement. In making this judgement, the Group evaluates, among other factors,
historical share price movements and the duration and extent to which the fair value of
an investment is less than its cost.
(h) Classification of Leasehold Land
The classification of leasehold land as a finance lease or an operating lease requires the
use of judgement in determining the extent to which risks and rewards incidental to its
ownership lie. Despite the fact that there will be no transfer of ownership by the end of
the lease term and that the lease term does not constitute the major part of the indefinite
economic life of the land, management considered that the present value of theminimum
lease payments approximated to the fair value of the land at the inception of the lease.
Accordingly, management judged that the Group has acquired substantially all the risks
and rewards incidental to the ownership of the land through a finance lease.
(i) Impairment of Goodwill
Goodwill is tested for impairment annually and at other times when such indicators
exist. This requires management to estimate the expected future cash flows of the cash-
generating unit to which goodwill is allocated and to apply a suitable discount rate in
order to determine the present value of those cash flows. The future cash flows are most
sensitive to budgeted gross margins, growth rates estimated and discount rate used. If
the expectation is different from the estimation, such difference will impact the carrying
value of goodwill.
(j) Fair Value Estimates for Certain Financial Assets and Liabilities
The Group carries certain financial assets and liabilities at fair value, which requires
extensive use of accounting estimates and judgement. While significant components of
fair valuemeasurement were determined using verifiable objective evidence, the amount
of changes in fair value would differ if the Group uses different valuation methodologies.
Any changes in fair value of these assets and liabilities would affect profit and/or equity.
4.2 FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using a valuation technique. The
measurement assumes that the transaction takes place either in the principal market or in
the absence of a principal market, in the most advantageous market. For non-financial asset,
the fair value measurement takes into account a market’s participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
