Sustainability and Governance Report
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Notes to the FINANCIAL STATEMENTS
3.
Significant accounting judgements and estimates
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. Uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.
3.1 Judgements made in applying accounting policies
Management is of the opinion that there is no significant judgement made in applying accounting policies.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period are discussed below. The Group based its
assumptions and estimates on parameters available when the financial statements was prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
(a) Allowance for inventories
Allowance for inventories is estimated based on the best available facts and circumstances, including but not limited to, the physical condition of the inventories, their
market selling prices, and estimated costs to be incurred for their sales. The allowances are re-evaluated and adjusted as additional information received affects the
amount estimated. The carrying amount of the Group's inventories at balance sheet date was $11,396,000 (2019: $10,626,000).
(b) Allowance for expected credit losses of amounts due from related parties
The Group estimates allowance for expected credit losses ("ECLS") for the amounts due from related parties by incorporating various factors such as their assessment
of the related parties' credit worthiness based on the aging of the receivables, available credit enhancements, historical repayments, refinancing and credit loss patterns
and the current and forward-looking factors specific to the related parties and the economic environments where they operate in.
The assessment of the correlation between historical repayments, refinancing and credit loss patterns, current and forward-looking factors and ECLs is a significant
estimate. The amount of ECLS is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical repayments, refinancing and credit
loss experience and forecast of economic conditions may also not be representative of the related parties' actual default in the future. The information about the ECLs on
the Group's amounts due from related parties is disclosed in Note 28(c).
The carrying amounts of amounts due from related parties are disclosed in Notes 12 and 13 to the financial statements.
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