Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) (a) Impairment of goodwill (continued) These discounted cash flow calculations use five-year projections that are based on financial forecast. Cash flow projections take into account past experience and represent management’s best estimate about future developments. Cash flows after the five-year period are extrapolated to perpetuity using terminal growth rates. Key assumptions on which management has based its determination of recoverable value include estimated revenue amount and weighted average cost of capital adjusted for specific risks associated with the cash-generating units. Due to the uncertainty of the future economic condition, management developed the base case and worst case scenario of cash flow projections. Probabilities of occurrence were assigned to each scenario to arrive at a single set of cash flow projection. The assumptions used in both scenarios and the probabilities of occurrence assigned required management’s judgement. Changes in assumptions could affect the results of the Group’s test for impairment of goodwill. Further details of the carrying amount and the key assumptions applied in the impairment assessment of goodwill are given in Note 7. (b) Impairment of non-financial assets The Group assesses whether there is any indication that non-financial assets are impaired at the end of each reporting period. Impairment is measured by comparing the carrying amount of an asset with its recoverable amount. Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). For certain plant and equipment, fair value less cost to sell is determined based on estimates prepared by an independent expert. The fair value is estimated based on comparison of market transacted price for similar plant and equipment, and where necessary, adjusted for age, usage and conditions of the plant and equipment and expectation of future market outlook of the industry due to the uncertainty of the future economic condition. Details of the carrying amount and the key assumptions applied in the impairment assessment of property, plant and equipment and investment properties are in Notes 4 and 6. During the financial year, impairment charge of RM1,847,000 and RM19,000 (2022: RM Nil) was provided to the property, plant and equipment and investment properties respectively. Refer to Notes 4 and 6 for further details. (c) Impairment of investments in associates and joint ventures The carrying amount of investments in associates and joint ventures are compared to their recoverable amount. The recoverable amount was determined using their value-in-use. The valuein-use is the net present value of the projected future cash flows to be derived from that asset. Projected future cash flows are calculated based on historical sector and industry trends, general market and economic conditions, changes in technology and other available information. Due to the uncertainty of the future economic condition, management developed the base case and worst case scenario of cash flow projections. Probabilities of occurrence were assigned to each scenario to arrive at a single set of cash flow projection. The assumptions used in both scenarios and the probabilities of occurrence assigned required management’s judgement. During the financial year, impairment charge of RM Nil (2022: RM39,537,000) and RM Nil (2022: RM 8,989,000) was provided to the investment in associate and joint venture respectively. Refer to Notes 10 and 11 for further details. 191 Wasco Berhad
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