| ANNUAL REPORT 2015
124
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)
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) Depreciation of property, plant and equipment
The cost of property, plant and equipment is depreciated on a straight line basis over the assets’ useful lives.
Management estimates that the useful lives of these property, plant and equipment as disclosed in Note 4.4 to
the financial statements. These are common life expectancies applied in the industry which the Group operates.
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.
(b) Impairment of goodwill on consolidation
The Group determines whether goodwill on consolidation 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. Further details are
disclosed in Note 9(a) to the financial statements.
(c) Impairment of trademarks
The Group determines whether trademarks are impaired at least on an annual basis. This requires an estimation of
the value-in-use of the trademarks. Estimating a value-in-use amount requires management to make an estimate of
the expected future cash flows from royalty income and also to choose a suitable discount rate in order to calculate
the present value of those cash flows. Further details are disclosed in Note 9(b) to the financial statements.
(d) Taxation
(i) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent
that it is probable that future taxable profits would be available against which the losses and capital allowances
could be utilised. Significant management judgement is required to determine the amount of deferred tax
assets that could be recognised, based on the likely timing and extent of future taxable profits together with
future tax planning strategies.
(ii) Income taxes
Significant judgement is required in determining the capital allowances, deductibility of certain expenses and
taxability of certain income during the estimation of the provision for income taxes.There aremany transactions
and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
The Group and the Company recognise tax liabilities based on estimates of whether additional taxes would be
due. Where the final tax outcome is different from the amounts that were initially recorded, such differences
would impact the income tax and deferred tax provisions in the period in which such determination is made.
(e) Write down for obsolete or slow moving inventories
The Group writes down its obsolete or slow moving inventories based on an assessment of their estimated net
selling price. Inventories are written down when events or changes in circumstances indicate that the carrying
amounts could not be recovered. Management specifically analyses fashion pattern, current economic trends and
changes in customer preference 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.
