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FIMA CORPORATION BERHAD
(21185-P) |
Annual Report
2016
NOTES TO THE FINANCIAL
STATEMENTS 31 MARCH 2016
(contd.)
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Significant Accounting Estimates and Judgements
Estimates, assumptions concerning the future and judgements are made in the preparation of the
financial statements. They affect the application of the Group’s accounting policies, reported amounts
of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-
going basis and are based on experience and other relevant factors, including expectations of future
events that are believed to be reasonable under the circumstances. The significant 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:
(i) Classification between investment properties and property, plant and equipment
The Group developed certain criteria 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 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.
(ii) Income taxes
The Group and the Company are subject to income taxes in Malaysia and Indonesia. Significant
judgment is required in determining the allowances and deductibility of certain expenses during
the estimation of the provision for income taxes. There are many transactions and calculations
for which the ultimate tax determination is uncertain during the ordinary course of business. The
Group recognises liabilities for anticipated tax matters 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 recorded, such differences will impact the income tax and deferred tax provisions
in the period in which the determination is made. The Group’s and the Company’s tax expense
for the current financial year is RM22,428,000 (2015: RM27,522,000) and RM888,000 (2015:
RM558,000) respectively, as disclosed in Note 9.
(iii) Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences
can be utilised. Significant management judgment 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 Group’s and the Company’s deferred tax assets
as at 31 March 2016 is RM8,952,000 (2015: RM5,921,000) and RM563,000 (2015: RM552,000)
respectively, as disclosed in Note 27.