Baker Technology LimitedAnnual Report 2014
103
3.
Significant accounting judgments andestimates (cont’d)
3.2
Key sources of estimationuncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of
each reportingperiodarediscussedbelow. TheGroupbased its assumptions andestimates onparameters
availablewhen thefinancial statementswereprepared.Existingcircumstancesandassumptionsabout future
developments, however,may changedue tomarket changesor circumstances arisingbeyond the control of
theGroup. Such changes are reflected in theassumptionswhen theyoccur.
(a)
Impairment of non-financial assets
An impairment exists when the carrying value of an asset or cash generating unit exceeds its
recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The
fair value less costs to sell calculation is basedon availabledata frombinding sales transactions in
an arm’s length transactionof similar assets or observablemarket prices less incremental costs for
disposing theasset.Thevalue inusecalculation isbasedonadiscountedcashflowmodel.Thecash
flows arederived from thebudget for thenext five years anddonot include restructuringactivities
that theGroup isnot yet committed toor significant future investments thatwill enhance theasset’s
performanceof the cashgeneratingunit being tested.
Asdisclosed inNote12 to thefinancial statements, the recoverableamountof thecashgenerating
unit isdeterminedbasedonvalue inusecalculations. Thevalue inusecalculationsarebasedona
discounted cashflowmodels. The recoverableamount ismost sensitive to thediscount rateused
for the discounted cash flowmodel as well as the expected future cash inflows and the growth
rate used for extrapolation purposes. The key assumptions applied in the determination of the
value in use including a sensitivity analysis are disclosed and further explained inNote 12 to the
financial statements.
The carryingamount of goodwill as at 31December 2014 is $7,551,331 (2013: $7,551,331).
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31December 2014
