FGV Annual Report 2015

232 Notes to the Financial Statements For The Financial Year Ended 31 December 2015 Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgments are continually evaluated by Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (i) LLA liability The fair value of the LLA liability is measured using a discounted cash flow calculation using cash flow projections based on financial budgets approved by the Directors covering a 96 year period. As a result of the fair value assessment, the Group has recognised a LLA liability of RM4,627,195,000 (2014: RM4,680,829,000). The key assumptions and the sensitivity analysis are as disclosed in Note 46 to the financial statements. (ii) Goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units (“CGU”) to which the goodwill is allocated. Estimating the recoverable amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The recoverable amounts of CGUs were determined based on the higher of fair value less cost to sell or value in use calculations. As a result of these impairment assessments, the Group has recognised an impairment charge on goodwill of RM12,770,000 (2014: Nil) during the financial year. The key assumptions and the sensitivity analysis are as disclosed in Note 21 to the financial statements. (iii) Intangible assets (other than goodwill), property, plant and equipment, investment properties and biological assets The Group tests intangible assets (other than goodwill), property, plant and equipment, investment properties and biological assets for impairment if there is any objective evidence of impairment. Management have assessed that certain intangible assets other than goodwill, property, plant and equipment, investment properties and biological assets may be potentially impaired or the existing impairment may be reversed. The recoverable amounts of these assets were determined based on the higher of fair value less cost to sell or value in use calculations. As a result of the assessment, the Group has recognised a net reversal of impairment of RM114,702,000 (2014: net reversal of impairment of RM10,167,000) against certain property, plant and equipment, investment properties, intangible assests (other than goodwill), prepaid lease payments and biological assets, and accelerated depreciation of RM6,055,000 (2014: RM9,356,000) against its biological assets. The key assumptions and the sensitivity analysis are as disclosed in Notes 19, 21 and 29 to the financial statements. (iv) Deferred tax assets Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. This involves judgment regarding the future financial performance of the particular entity in which the deferred tax asset has been recognised. The amount of deferred tax assets arising from tax losses recognised amounted to RM202,848,000 (2014: RM135,883,000) and RM24,046,000 (2014: RM23,966,000) for the Group and Company respectively.