102
Baker Technology LimitedAnnual Report 2014
3.
Significant accounting judgments andestimates
The preparation of the Group’s financial statements requires management tomake judgments, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
disclosureof contingent liabilities at the reportingdate. However, uncertainty about theseassumptions and
estimates could result inoutcomes that requireamaterial adjustment to the carryingamount of theasset or
liabilityaffected in the futureperiods.
3.1
Judgmentsmade in applying accountingpolicies
In theprocessof applying theGroup’saccountingpolicies,management hasmade the following judgments,
apart from those involvingestimations, whichhave themost significant effect on theamounts recognised in
the consolidatedfinancial statements:
Determinationof functional currency
TheGroupmeasures foreign currency transactions in the respective functional currencies of theCompany
and itssubsidiaries. Indetermining the functional currenciesof theentities in theGroup, judgment is required
to determine the currency that mainly influences sales prices for goods and services and of the country
whose competitive forces and regulationsmainly determines the sales prices of its goods and services. The
functional currenciesof theentities in theGrouparedeterminedbasedonmanagement’sassessmentof the
economicenvironment inwhich theentitiesoperateand theentities’ processof determining salesprices.
Income taxes
Significant judgement is involved indetermining theGroup-wideprovision for income taxes.Therearecertain
transactions and computations for which the ultimate tax determination is uncertain during the ordinary
course of business. TheGroup recognises liabilities for expected tax issues basedon estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts
that were initially recognised, suchdifferenceswill impact the income tax anddeferred taxprovisions in the
period inwhich such determination ismade. The carrying amount of theGroup’s income tax payables and
deferred tax assets as at 31December 2014was $3,371,474 and $1,018,000 (2013: $3,767,092 and $876,000),
respectively. Thegainondisposal of anassociate (seeNote14) is capital innatureandnot taxable.
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31December 2014
