Serba Dinamik Annual Report 2021

Registration No: 201501042584 (1167905-P) Serba Dinamik Holdings Berhad (Incorporated in Malaysia) 55 5. Significant accounting judgement and estimates Key sources of estimation uncertainty The preparation of financial statements in accordance with MFRSs requires the use of certain accounting estimates and exercise of judgement. Estimates and judgements are continually evaluated and are based on past experience, reasonable expectations of future events and other factors. The key assumptions concerning the future and other key sources of estimation uncertainty at the financial period end that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are described below: (a) Depreciation of property, plant and equipment The Group and the Company depreciate the property, plant and equipment over their estimated useful lives and after taking into account their estimated residual values, using the straight-line method. The estimated useful lives applied by the Group and the Company as disclosed in Note 3(b) reflect the Directors’ estimates of the periods that the Group and the Company expect to derive future economic benefits from the use of the Group’s and the Company’s property, plant and equipment. Technological advancements could impact the useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (b) Impairment of property, plant and equipment The Group and the Company carry out the impairment test based on a variety of estimation including the value-in-use of the cash-generating unit (CGU) to which the property, plant and equipment are allocated. Estimating the value-in-use requires the Group and the Company to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. (c) Impairment of investment in subsidiaries and associates The investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the accounting policy. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss. The Company carries out the impairment test based on a variety of estimations including value-in-use of the CGUs to which the investment in subsidiaries and/or associates are allocated to. Estimating the value-in-use requires the Group or the Company to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. There could be further adjustments to the carrying value of the investments should the going concern basis be inappropriate.