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annual report | 2012 Gunung Capital Berhad (330171-P) 64 NOTES TO THE FINANCIAL STATEMENTS (cont’d) 31 DECEMBER 2012 3 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s and the Company’s accounting policies and reported amounts of assets, liabilities, income, expenses and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. 3.1 Judgements made in applying accounting policies There are no critical judgements made by management in the process of applying the Group’s accounting policies that has significant effect on the amounts recognised in the financial statements. 3.2 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 significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:- (a) Depreciation of property, plant and equipment and investment properties Property, plant and equipment and investment properties are depreciated on a straight-line basis over their estimated useful lives. Management estimated the useful lives of these assets to be within 5 to 99 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (b) Impairment of property, plant and equipment and investment properties The Group carries 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, and investment properties are allocated. Estimating the value-in-use requires the Group 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 trade and other receivables An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loans and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables. (d) Net realisable values of inventories The management reviews for slow-moving and obsolete inventories. This review requires judgement and estimates. Possible changes in these estimates could result in revision to the valuation of inventories.
NOTES TO THE FINANCIAL STATEMENTS (cont’d) 31 DECEMBER 2012 4 PROPERTY PLANT AND EQUIPMENT Group As at 01.01.2012 RM Additions RM Disposals RM As at 01.01.2012 RM Cost / Valuation At valuation: Buildings 3,156,105 - - 3,156,105 Long leasehold land 2,085,395 - - 2,085,395 5,241,500 - - 5,241,500 At cost: Buildings 3,427,027 - - 3,427,027 Long leasehold land 3,041,906 - - 3,041,906 Plant and machinery 231,219 - - 231,219 Motor vehicles 111,772,684 10,746,740 (5,385,024) 117,134,400 Furniture, fittings and equipment 2,232,943 10,113 - 2,243,056 120,705,779 10,756,853 (5,385,024) 126,077,608 Total 125,947,279 10,756,853 (5,385,024) 131,319,108 As at 01.01.2012 RM Charge for the year RM Disposals RM As at 01.01.2012 RM Accumulated Depreciation At valuation: Buildings 651,514 63,122 - 714,636 Long leasehold land 806,128 28,341 - 834,469 1,457,642 91,463 - 1,549,105 At cost: Buildings 1,058,249 67,537 - 1,125,786 Long leasehold land 251,172 19,305 - 270,477 Plant and machinery 71,016 13,622 - 84,638 Motor vehicles 27,960,143 18,917,477 (913,102) 45,964,518 Furniture, fittings and equipment 1,563,040 140,246 - 1,703,286 30,903,620 19,158,187 (913,102) 49,148,705 Total 32,361,262 19,249,650 (913,102) 50,697,810 Gunung Capital Berhad (330171-P) 65 annual report | 2012
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