92
GHL Systems Berhad
(293040-D)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014 (continued)
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
6.2 Critical judgements made in applying accounting policies (continued)
(g) Consolidation of an entity in which the Group holds less than majority of voting rights
The Group controls Pinoytek Solusyen, Inc. (“Pinoytek”) and e-pay Thailand Co. Limited (“e-pay
Thailand”) even though it owns less than fifty percent (50%) of the voting rights. These are
because the key management personnel of Pinoytek and e-pay Thailand, who have the ability
to direct the relevant activities, are current employees of the Group. Furthermore, significant
portion of Pinoytek’s and e-pay Thailand’s activities are conducted on behalf of the Group.
6.3 Key sources of estimation uncertainty
The following are key assumptions concerning the future and other key sources of estimation
uncertainty at the end of each reporting period that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
(a) Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires
an estimation of the value-in-use of the subsidiaries to which goodwill is allocated. Estimating a
value-in-use amount requires management to make an estimate of the expected future cash
flows from the subsidiaries and also to choose a suitable discount rate in order to calculate the
present value of those cash flows. The key assumptions on goodwill are disclosed in Note 9 to the
financial statements.
(b) Depreciation of EDC equipment
The cost of EDC equipment is depreciated on a straight-line basis over the assets’ useful lives.
Management estimates that the useful lives of these equipment to be within five (5) years,
which are common life expectancies applied in the industry. Changes in the expected level
of usage and technological developments could impact the economic useful lives and the
residual values of these assets, and therefore future depreciation charges could be revised. A
ten percent difference (10%) in the average useful lives of these assets from the management’s
estimates would result in approximately nine percent (9%) variance in profit for the financial year.
(c) Impairment of intangible assets
The Group reviews the carrying amounts of the intangible assets as at the end of each reporting
period to determine whether there is any indication of impairment. If any such indication exists,
the assets’ recoverable amount or value-in-use is estimated. Determining the value-in-use of
intangible assets requires the determination of future cash flows expected to be generated
from the continued use, and ultimate disposition of such assets. Significant judgement is required
in the estimation of the present value of future cash flows generated by the intangible assets,
which involve uncertainties and are significantly affected by assumptions used and judgement
made regarding estimates of future cash flows and discount rates. Changes in assumptions could
significantly affect the results of the Group’s assessment for impairment of intangible assets.
