3. Significant accounting judgements and estimates (cont’d.)
(ii) Useful lives of buildings, plant and equipment
The Group and the Company estimate the useful lives of buildings, plant and equipment based on the
period over which the assets are expected to be available for use. The estimated useful lives of buildings,
plant and equipment are reviewed periodically and are updated if expectations differ from previous
estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits
on the use of the relevant assets. In addition, the estimation of the useful lives of buildings, plant and
equipment are based on management’s evaluation and experience with similar assets. It is possible,
however, that future results of operations could be materially affected by changes in the estimates brought
about by changes in factors mentioned above. The amounts and timing of recorded expenses for any
period would be affected by changes in these factors and circumstances. A reduction in the estimated
useful lives of the buildings, plant and equipment would increase the depreciation expenses and decrease
the carrying amount on buildings, plant and equipment.
The cost of buildings, plant and equipment is depreciated on a straight-line basis over the asset’s estimated
economic useful lives. Management estimates the useful lives of these buildings, plant and equipment to
be within 2 to 30 years. Changes in the expected level of usage and technological developments could
impact the economic useful lives and the residual values of these assets, therefore, future depreciation
charges could be revised. The carrying amount of the Group and the Company’s buildings, plant and
equipment at the reporting date is disclosed in Note 12.
(iii) Impairment of biological assets and property, plant and equipment
The Group and the Company review the carrying amounts of the biological assets and property, plant and
equipment as at each reporting date to determine whether there is any indication of impairment. If any
such indication exists, the assets’ recoverable amount which is the higher of value in use or fair value less
costs of disposal is estimated. Determining the value in use of biological assets and property, plant and
equipment requires the determination of future cash flows expected to be generated from the continued
use and ultimate disposition of such assets, which thus require the Group and the Company to make
estimates and assumptions that can materially affect the financial statements. Any resulting impairment
loss could have a material adverse impact on the Group and the Company’s financial position and results
of operations.
The preparation of the estimated future cash flows involves significant judgement and estimations. While
the Group and the Company believe that the assumptions are appropriate and reasonable, changes in the
assumptions may materially affect the assessment of recoverable amounts. The provision for impairment
of property, plant and equipment and biological assets is disclosed in Notes 12 and 13.
(iv) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses, unabsorbed capital and agricultural allowances
and deductible temporary differences to the extent that it is probable that taxable profit will be available
against which the losses, allowances and deductible temporary differences can be utilised. The recognition
of deferred tax assets is based upon the likely timing and level of future taxable profits together with tax
planning strategies. Deferred tax assets not recognised on unused tax losses, capital and agricultural
allowances and other deductible temporary differences of the Group was RM339,400,000 (2014:
RM319,457,000).
n otes to th e f i nan c i a l statements
Bo ustead plantati o ns Berhad
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