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Fima Corporation Berhad
(21185-P)
financial statements
116
NOTES TO THE FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)
2.4 Significant Accounting Estimates and Judgments (Cont’d.)
(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
RM26,254,000 (2016: RM22,428,000) and RM698,000 (2016: RM888,000) 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 2017 is RM9,408,000 (2016: RM8,952,000) and RM564,000 (2016: RM563,000)
respectively, as disclosed in Note 26.
(iv) Useful lives and depreciation of property, plant and equipment
Management uses key source of estimation and critical judgment in the process of applying the Group’s accounting
policies for depreciation in respect of plant and machinery.
The cost of plant and machinery is depreciated on a straight-line basis over the assets’ useful lives. Management
estimates that the useful lives of the plant and machinery to be within 4 to 10 years. These are common life
expectancies applied in the industry.
Changes in the expected level of usage and technological developments could impact the economic useful lives and
the residual values of these assets, therefore future depreciation charges could be revised.