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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (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 thirteen percent (13%) 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.