3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D.) (a) Impairment of property, plant and equipment and right-of-use assets (cont’d.) Determining the VIU of CGU or Groups of CGU requires the determination of future cash flows expected to be derived from continuing use of the asset and from the ultimate disposal of such assets, which thus require the Group and the Company to make estimates and assumptions that can materially affect the financial statements. The estimation of the recoverable amount 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 accumulated impairment losses are disclosed in Notes 13 and 14. (b) Impairment of goodwill The Group tests for impairment of goodwill annually and at any other time when such indicators exist. This requires an estimation of VIU of the assets or CGU to which the goodwill is allocated. Estimating the VIU requires management to estimate the expected future cash flows from the asset or CGU and also to choose a suitable discount rate in order to determine the present value of those cash flows. The preparation of the estimated future cash flows involves significant judgement and estimations. While the Group believes that the assumptions are appropriate and reasonable, changes in the assumptions may materially affect the assessment of recoverable amounts. The carrying amount of goodwill as at 31 December 2023 was RM2,281,000 ( 2022: RM2,281,000) as disclosed in Note 17. (c) 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 of the Group amounted to RM447,141,000 (2022: RM437,302,000) at the reporting date as disclosed in Note 18. (d) Fair value of biological assets Biological assets represent the produce growing on oil palms. FFB are harvested from the oil palms for use in the production of CPO and palm kernel (PK). The growing produce are essentially FFB prior to harvesting. An oil palm fruit typically starts to develop oil from about 14 to 15 weeks after pollination. The oil content in the fruit increases exponentially over the next 5 weeks and reaches its maximum at about 22 weeks. Management considered the maturity stages of FFB and concluded that unripen FFB of up to 3 to 4 weeks would be used in the computation of the fair value of biological assets. The fair value of the growing produce is determined on the basis of present value of expected future cash flows which takes into consideration the production and estimated selling prices of CPO and PK adjusted for extraction rates, processing, harvesting and transport costs. The carrying amount of biological assets is disclosed in Note 21. If the tonnage of unripen FFB vary by 10%, the fair value of the Group’s and Company’s biological assets would increase or decrease by RM2,995,000 (2022: RM3,184,000) and RM1,132,000 (2022: RM1,111,000) respectively. Boustead Plantations Berhad 216 NOTES TO THE FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy NTkwNzg=