Annual Report - QuamIR

Notes to the Consolidated Financial Statements (Continued)
4 Critical accounting estimates and judgements (Continued)
(c) Estimated impairment of goodwill
The Group tests annually whether goodwill is subject to any
impairment losses, in accordance with the accounting policy.
The recoverable amounts of cash-generating units with goodwill
being allocated have been determined based on the higher of fair
value less cost to sell and value-in-use calculations.
(d) Estimated impairment of plant and equipment
Plant and equipment are reviewed by management for
impairment losses whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. The
recoverable amount is the higher of fair value less costs to sell
and value in use of the plant and equipment. Management
makes judgements on whether such events or changes
in circumstances have occurred, and makes estimates in
determining the recoverable amount. In the situation where
the value in use of plant and equipment cannot be assessed
due to the uncertainties of the operation model in the future,
management has assessed the respective recoverable amount
solely based on the fair value less costs to sell. Provision is made
when events or changes in circumstances indicate that the
carrying amounts may not be recovered.
4
(c)
(d)
If the recoverable amount of the plant and equipment had been
10% higher or lower than management’s estimates, the profit
for the year arising from the Group’s plant and equipment would
have been increased by HK$54.7 million or remained unchanged
(2010: the loss for the year arising from the Group’s plant and
equipment would have been decreased by HK$59.5 million or
remained unchanged).
(e) Income taxes
The Group is subject to income taxes in the Mainland China.
Significant judgement is required in determining the provision for
income taxes. There are many transactions and calculations for
which the ultimate tax determined is uncertain during the ordinary
course of business. The Group recognises liabilities for potential
tax exposures based on estimates of whether additional taxes will
be due. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences
will affect the income tax and deferred tax provision in the period
in which such determination is made.
10%
54,700,000
59,500,000
(e)
120 HKC (Holdings) Limited • Annual Report 2011