NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
139
ANNUAL REPORT 2015
42.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
(a)
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 were 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.
(i)
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. The recoverable amount of
the cash-generating unit is determined based on value in use calculations. The value in use calculations are
based on a discounted cash flow model. The recoverable amount is most sensitive to the discount rate used
for the discounted cash flow model as well as the terminal growth rate. The key assumptions applied in the
determination of the value in use including a sensitivity analysis, are disclosed and further explained in note
17. The carrying amount of goodwill at 31 December 2015 was $17,604,000 (2014: $20,247,000).
(ii)
Depreciation of property, plant and equipment
Property, plant and equipment are depreciated using the appropriate basis as outlined in note 2.10 over the
estimated useful lives of these assets. The carrying amount of the Group’s property, plant and equipment at
31 December 2015 was $34,434,000 (2014: $35,737,000).
The cost of plant and machinery for tin smelting and refining is depreciated on a straight-line basis over the
assets’ useful lives. Management estimates the useful lives of these plant and machinery to be within 10 to 40
years. These are common life experiences applied in such industry. Changes in the expected level of usage
could impact the economic useful lives and the residual values of these assets, therefore future depreciation
charge could be revised.
In the tin mining subsidiaries, plant and equipment used in mining are depreciated using the unit-of-
production method based on economically recoverable ore reserves and resources over the estimated
useful lives of the assets. Changes in estimated economically recoverable ore reserves and resources and
useful lives of plant and equipment are accounted for on a prospective basis from the beginning of the year
in which the changes arise. Changes in the estimated economically recoverable ore reserves and resources
and the expected level of usage could impact the economic useful lives and the residual values of these
assets, therefore future depreciation charge could be revised.
The carrying amount of property, plant and equipment related to the subsidiary in resources business amount
to $32,810,000 (2014: $33,789,000).
