Sample Disclosure – Key Sources Of Estimation Uncertainty (3 December 2008)

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Impairment of goodwill and investment in subsidiaries

The Group determines whether goodwill and investments in subsidiaries are impaired at least on an annual basis. These require the estimation of the value-in­use of the cash-generating units (“CGU”) to which goodwill and the investments in subsidiaries are allocated and belong to. Estimating a value-in-use amount requires management to make an estimate of the expected cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the goodwill of the Group was RMxxxxxx (day/month/year: RMxxxxxxx) and investments in subsidiaries of the Company was RMxxxxxxx (day/month/year: RMxxxxxxxx) as at day/month/year. Further details of goodwill and investments in subsidiaries are disclosed in Note xx and xx respectively.

(ii) Deferred tax assets

Deferred tax assets are recognised for unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses, capital allowances and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with tax planning strategies. The total carrying amount of unused tax losses, unabsorbed capital allowances and other deductible temporary differences of the Group and the Company for which deferred tax assets have not been recognised are as disclosed in Note xx.

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