Sasbadi Annual Report 2021

97 ANNUAL REPORT 2021 FINANCIAL STATEMENTS (continued) 97 12. INVENTORIES Group 2021 2020 RM’000 RM’000 At cost/net realisable value Raw materials 2,568 3,757 Finished goods 55,962 65,629 58,530 69,386 Recognised in profit or loss: Inventories recognised as cost of sales 18,745 27,802 Write down of inventories 10,997 5,293 Cost of inventories is determined using the first-in first-out and weighted average method and are stated at lower of cost and net realisable value. The Group writes down its obsolete or slow moving inventories based on assessment of their product lifecycle and nature. Inventories are written down when events or changes in circumstances indicate that the carrying amounts could not be recovered. Management specifically analyses sales trend when making this judgement to evaluate the adequacy of the write down for obsolete or slow moving inventories. Where expectations differ from the original estimates, the differences would impact the carrying amount of inventories. 13. RIGHT TO RECOVER RETURNED GOODS/(REFUND LIABILITIES) Group 2021 2020 RM’000 RM’000 Right to recover returned goods 990 1,283 Refund liabilities (1,876) (2,414) An asset with a right to recover returned goods and the corresponding refund liabilities are recognised in relation to finished goods sold with a right of return. These are measured by reference to the former carrying amounts of the sold inventories less any expected costs to recover those inventories and any potential decreases in the value to the Group of the returned inventories. 14. CONTRACT WITH CUSTOMERS (a) Contract costs Group 2021 2020 RM’000 RM’000 Cost to obtain a contract 579 597 Cost to obtain a contract primarily comprises commission fees paid to intermediaries as a result of obtaining contracts and they are recoverable. Capitalised commission fees are amortised when the related revenues are recognised. During the current financial year, the amount of amortisation was RM1,311,000 (2020: RM1,159,000).