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Notes to the financial statements
31 December 2012
(continued)
Annual Report 2012 KPJ Healthcare Berhad
3. Significant accounting judgements and estimates (continued)
3.1 Judgements made in applying accounting policies (continued)
(a) Classification between investment properties and property, plant and equipment
The Group has developed certain criteria based on MFRS 140 in making judgement whether a property qualifies as an investment property.
Investment property is a property held to earn rentals or for capital appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production
or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance
lease), the Group would account for the portions separately. If the portions could not be sold separately, the property is an investment property
only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made
on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting 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.
(a) Useful lives of property, plant and equipment
The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment’s estimated economic
useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 50 years. These are common life
expectancies applied in the industry.
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. Management will review the estimated useful lives and residual values of property,
plant and equipment at each financial year-end and adjustments to useful lives are made when considered necessary. Therefore, the future
depreciation charges could be revised. The carrying amount of the Group’s property, plant and equipment at the reporting dates are disclosed in
Note 13.
(b) Estimated impairment of goodwill
The Group tests goodwill for impairment annually whether goodwill has suffered any impairment, in accordance with its accounting policy stated
in Note 2.10. More regular reviews are performed if events indicate that this is necessary.
The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. The calculations require the use of
estimates as set out in Note 20.
(c) Income tax
Significant estimation is involved in determining the provision for income taxes. There are certain transactions and computations for which the
ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amount that were initially
recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Details of
income tax expense are disclosed in Note 10.
(d) 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 taxable profit
will be available against which the losses and capital allowances 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 future tax
planning strategies. The total carrying value of unrecognised tax losses of the Group are disclosed in Note 21.