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Axiata Group Berhad | Annual Report 2016
FINANCIAL STATEMENTS
152
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
(b) Critical accounting estimates and assumptions (continued)
(i) Impairment assessment of goodwill (continued)
These calculations require the use of estimates. The calculations are inherently judgemental and susceptible to change from period to
period because they require the Group to make assumptions about revenue growth, exchange rates, an appropriate discount rate and
terminal growth rate.
The assumptions used, results and sensitivities of the impairment assessment of goodwill are disclosed in Note 25 to the financial
statements.
(ii) Impairment assessment on non-financial assets (excluding goodwill)
The Group and the Company assess impairment of the assets or CGUs mentioned above whenever the events or changes in circumstances
indicate that the carrying amount of an asset or CGU may not be recoverable i.e. the carrying amount of the asset is more than the
recoverable amount. Recoverable amount is measured at the higher of the FVLCS for that asset or CGU and its VIU.
Projected future cash flows used in impairment testing of the assets or CGUs mentioned above are based on Group’s and Company’s
estimates calculated based on historical, sector and industry trends, general market and economic conditions, changes in technology
and other available information.
The recoverable amounts of the asset or CGUs have been determined based on VIU or FVLCS calculations. These calculations require
the use of estimates. The calculations are inherently judgemental and susceptible to change from period to period because they require
the Group and the Company to make assumptions about revenue growth, exchange rates, an appropriate discount rate and terminal
growth rate.
The assumptions used and results of the impairment assessment of investment in an associate are disclosed in Note 29 to the financial
statements.
(iii) Estimated useful lives of PPE
The Group reviews the estimated useful lives of PPE based on network and information technology (“IT”) modernisation being planned
by the Group. The network and IT modernisation involves estimating when the assets will be upgraded based on the approved
modernisation plans and the useful lives of the network and IT assets are revised accordingly. Future results of operations could be
materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated
useful lives of PPE would increase the recorded depreciation charge and decrease the PPE balance.
(iv) Taxation
Income taxes
The Group and the Company are subject to income tax in numerous jurisdictions. Judgement is involved in determining the group-
wide 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 and the Company recognise liabilities for tax matters based on estimates of whether
additional taxes will be due. If the final outcome of these tax matters result in a difference in the amounts initially recognised, such
differences will impact the income tax and/or deferred tax provisions in the period in which such determination is made.
Deferred tax assets
Deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which temporary
differences can be utilised. This involves judgement regarding future financial performance of a particular entity in which the deferred
tax asset has been recognised.