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3. Critical Accounting Judgements and Key Sources of Estimation
Uncertainty (cont’d)
Key sources of estimation of uncertainty (cont’d)
Provision for reinstatement cost
The Group is required to estimate and recognise the cost to be incurred in returning the leased premises to their original
condition upon vacating the premises on expiry of the lease. Management has provided for such cost based on the likely
amount to be incurred and the period over which it should be amortised. The carrying value of reinstatement cost is set
out in Note 18.
Impairment of investments in, loan to and receivables from
subsidiaries and associates in the Co-operative’s financial statements
Investments in subsidiaries, loan to and receivables from subsidiaries and associates are tested for impairment whenever
there is any objective evidence or indication that these assets may be impaired. The recoverable amounts of these assets
have been determined based on the higher of fair value less cost to sell and value-in-use calculations. These calculations
require the use of estimates.
Key assumptions for the value-in-use calculations are those regarding the discount rates, growth rates and expected
changes to cash flows during the period. Management estimates discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks specific to the investment. Estimates of growth rates are
based on economic growth forecasts for the countries in which the subsidiaries operate. Changes in cash flows take into
consideration the business plan and expectations of future changes in the market.
The carrying amounts of investments in, loan to and receivables from subsidiaries and associate are disclosed in Notes
7, 10, 11 and 14.
Impairment on available-for-sale investments
In determining the impairment of an available-for-sale investments, management uses significant judgement and
evaluates, among other factors, the duration and extent to which the fair value of an investment or financial asset is less
than its cost; and the financial health of and near-term business outlook for the investment or financial asset, including
factors such as industry and sector performance, operational and financing cash flow. The carrying amount of available-
for-sale investments is disclosed in Note 12.
Allowance for inventories
The Group reviews the carrying value of its inventories to ensure that they are stated at the lower of cost and net
realisable value. In assessing the net realisable value and making appropriate allowances or writing off of these
inventories, management identifies inventories that are slow moving or obsolete, considers their physical conditions,
market conditions and market price for similar items.
The carrying amount of inventories is disclosed in Note 8.
Fair value measurements and valuation processes
Some of the Group’s assets are measured at fair value for financial reporting purposes. In estimating the fair value of an
asset or a liability, the Co-operative uses market-observable data to the extent it is available.
Information about the valuation techniques and inputs used in determining the fair value of various assets are disclosed
in Notes 4 and 12.
Notes to Financial Statements
December 31, 2014
