Page 104 - Neal and Massy Holdings Annual Report 2012

102 2012
NOTES TO THE Consolidated FINANCIAL STATEMENTS
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
4 Critical Accounting Estimates And Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. 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.
a) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated
in note 2.7. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of estimates (Note 8).
b) Income taxes
The Group is subject to income taxes in several jurisdictions. Significant judgement is required in determining the provision
for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises liabilities for anticipated tax audit 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 recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
c) Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.
The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market
conditions existing at each statement of financial position date. The Group uses discounted cash flow analyses for various
available-for-sale financial assets that were not traded in active markets.
d) Revenue recognition
The Group uses the percentage-of-completion method in accounting for its sales of services. Use of the percentage-of-
completion method requires the Group to estimate the services performed to date as a proportion of the total services to
be performed.
e) Pension benefits
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the
discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.