3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a
material adjustment to the carrying amount of the asset or liability affected in the future.
3.1 Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from
those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:
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) 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 2.9
. 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 19
.
(b) 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
.
231
Notes to the
Financial Statements
For the financial year ended 31 December 2014 (continued)
KPJ Healthcare Berhad annual report
2014
