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36.
ACCOUNTING ESTIMATES AND JUDGEMENTS
(continued)
Critical accounting judgements in applying the group’s accounting policies
Judgements made in the application of IFRS 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:
Property, plant and equipment
The residual values of these assets are reviewed annually after considering future market conditions, the remaining life of the asset and
projected disposal values. The estimation of the useful lives is based on historic performance as well as expectation about future use and,
therefore, requires a degree of judgement to be applied. The depreciation rates represent management’s current best estimate of the useful
lives of the assets. All properties are accounted for as own use assets and are thus held at cost less depreciation. Market indicators reflect
that these properties could realise more than their carrying values if disposed of.
Goodwill and intangible assets
The group has assessed the carrying value of goodwill and intangible assets to determine whether any of the amounts have been impaired.
The carrying values were assessed using a combination of price earnings and discounted cash flow methods and the actual results and
forecasts for future years.
Deferred taxation
Deferred taxation assets are recognised to the extent it is probable that the taxable income will be available against which they can be
utilised. Future taxable profits are estimated based on business plans which include estimates and assumptions regarding economic
growth, interest, inflation and taxation rates and competitive forces.
Inventories
Impairment allowances are raised against inventory when it is considered that the amount realisable from such inventory’s sale is
considered to be less than its carrying amount. The impairment allowances are made with reference to an inventory age analysis.
Trade receivables and other receivables
Management identifies possible impairment of trade receivables on an ongoing basis. An impairment allowance in respect of doubtful debts
is raised against the receivable when their collectibility is considered to be doubtful. Management believes that the impairment adjustment
is conservative and there are no significant receivables that are doubtful and have not been impaired or provided for. In determining
whether a particular receivable could be doubtful, the age, customer current financial status and disputes with the customer are taken into
consideration.
Provisions
Refer to note 30 for disclosure on the onerous contracts, provision for cost of dismantling and site restoration and customer loyalty
programmes.
Puttable non-controlling interest liabilities
The group has entered into put arrangements where non-controlling interests are entitled to sell certain of their holdings in subsidiaries
to the group at future contracted dates. The puttable non-controlling interest liability is calculated as the present value of the expected
redemption value, discounted from the expected redemption date to the reporting date. There are two main assumptions used in the
calculation of the liability; the expected redemption value at the expected redemption date and the discount rate used to discount the
expected redemption value to the reporting date.
The discount rate is derived from an applicable government bond yield curve in the country in which the subsidiary operates, and is applied
over the number of years between the reporting date and the redemption date, plus an appropriate credit spread.
FINANCIAL OVERVIEW
Notes to the consolidated financial statements
for the year ended June 30
FINANCIAL STAT MENTS
Annual integrated report 2017
Bid Corporation Limited
130