Frontken Berhad Annual Report 2019

102 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2019 15. GOODWILL ON CONSOLIDATION (CONT’D) (i) Budgeted gross margin Management determines budgeted gross margin based on past performance and its expectations of market development. (ii) Growth rates The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. These calculations use pre-tax cash flow projections based on financial budgets approved by management and extrapolated cash flows for a five-year period based on growth rates consistent with the long-term average growth rate for the industry. (iii) Discount rates Management estimates discount rate using pre-tax rate that reflect current market assessments of the time value of money and the risk specific to the CGU. The rate used to discount the forecasted cash flows reflects specific risks and expected returns relating to the industry.  (iv) Terminal value Terminal value is based on zero growth of projected present value of particular subsidiaries from year 2024 until infinity. The management believes that there is no reasonable change in the above key assumptions which would cause the carrying amount of the goodwill to exceed its recoverable amounts. 16. DEFERRED TAX ASSETS/LIABILITIES The Group 2019 2018 RM RM Deferred tax assets At 1 January 2,155,621 1,681,320 Transfer from profit or loss (Note 9) 91,083 448,594 Transfer to other comprehensive expenses 30,336 37,904 Foreign currency translation differences 18,457 (12,197) At 31 December 2,295,497 2,155,621 Deferred tax liabilities At 1 January 680,550 1,122,761 Transfer to profit or loss (Note 9) (275,424) (435,107) Foreign currency translation differences 2,715 (7,104) At 31 December 407,841 680,550 The net deferred tax liabilities and assets are in respect of the tax effects of the following:- The Group Deferred Tax (Assets)/Liabilities 2019 2018 RM RM Temporary differences arising from property, plant and equipment 224,549 462,997 Others (2,112,205) (1,938,068) (1,887,656) (1,475,071) Notes To The Financial Statements (cont’d)