A N N U A L R E P O R T 2 0 1 6
88
NOTES TO THE
FINANCIAL STATEMENTS
For the Financial Year Ended 31 March 2016
3.
Significant accounting estimates and judgements (cont’d)
3.1
Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgements which have the most significant
effect on the amounts recognised in the consolidated financial statements:
(a)
Valuation of freehold land and buildings
The Group carries its freehold land and buildings at fair value, with changes in fair values being recognised in other comprehensive
income. The fair values of freehold land and buildings are determined by independent professional valuer. In determining the fair
value, the valuer has determined the fair values using market comparable approach which involve the making of certain assumptions
and the use of estimates. In relying on the valuation report of the professional valuer, management has exercised judgement in
arriving at a value which is reflective of current market conditions. The carrying amount and key assumptions used to determine the
fair value are further explained in Note 32(c).
(b)
Income taxes
Significant judgement 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 amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in
the year in which such determination is made. The carrying amount of the Group’s income tax payables and deferred tax liabilities at
the end of the reporting period were $546,000 (2015: $1,357,000) and $1,662,000 (2015: $1,082,000) respectively.
3.2
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period are discussed
below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond
the control of the Group. Such changes are reflected in the assumptions when they occur.
