NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
42 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
(b)
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which has the most significant effect on the amounts recognised in the
financial statements:
(i)
Income taxes
The Group has exposure to income taxes in various jurisdictions. Significant 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 recognises
liabilities for expected tax issues 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 recognised, such differences
will impact the income tax and deferred tax provisions in the period in which such determination is made.
The carrying amounts are as follows:
Group
2014
2013
$’000
$’000
Income tax receivables
1,368
685
Income tax payable
1,682
7,036
Deferred tax assets
1,550
1,828
Deferred tax liabilities
6,051
6,857
(ii)
Impairment of investment securities
The Group reviews its equity investments classified as available-for-sale investments at each reporting date
to assess whether they are impaired. The Group records impairment charges on available-for-sale equity
investments when there has been a significant or prolonged decline in the fair value below their cost.
The determination of what is “significant” or “prolonged” requires judgement. In making this judgement,
the Group evaluates, among other factors, historical share price movements and the duration and extent
to which the fair value of an investment is less than its cost.
155
THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
