NOTES TO FINANCIAL STATEMENTS
30 June 2015
Annual Report 2015
Karin Technology Holdings Limited
75
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
(continued)
ESTIMATION UNCERTAINTY
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are described below.
Fair value of investment properties and leasehold land and buildings
Investment properties and leasehold land and buildings are carried in the consolidated statement of financial
position at their fair value. The fair value was based on a valuation on these properties conducted by an
independent firm of professional valuers using property valuation techniques which incorporate inputs such
as current prices in an active market for similar properties and involve making assumptions on certain market
conditions existed at the end of the reporting period. Favourable or unfavourable changes to these assumptions
would result in changes in the fair value of the Group’s investment properties and leasehold land and buildings
and the corresponding adjustments to the gain or loss recognised in profit or loss and the land and buildings
revaluation reserve, respectively.
Write-down of inventories to net realisable value and write-off of obsolete inventories
Management reviews the ageing analysis and condition of inventories of the Group on a product-by-product
basis at the end of each reporting period, and write-down the carrying amount of slow-moving inventory items
to their respective net realisable values and write-off obsolete inventories identified as no longer suitable for sale
or use. Management estimates the net realisable value for such inventories based primarily on the latest invoice
prices and current market conditions at the end of each reporting period.
Impairment assessment of trade receivables
The policy for impairment assessment of trade receivables of the Group is based on the evaluation of collectability
and the ageing analysis of trade receivables and on management’s estimation. A considerable amount of estimation
is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and
the past collection history of each debtor. If the financial conditions of debtors are to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be required.
Fair values of forward currency contracts
Forward currency contracts are stated at fair value. The Group estimates the fair values with reference to currency
forward exchange rates for contracts with similar maturity profiles. The use of methodologies, models and
assumptions in pricing and valuing these financial assets and liabilities is subjective and requires varying degrees
of judgement, which may result in significantly different fair values and results.
