Page 87 - Annual Report English 2018

Tycoons Worldwide Group (Thailand) Plc.

5. Significant accounting judgements and estimates

The preparation of financial statements in conformity with financial reporting standards
at times requires management to make subjective judgements and estimates regarding
matters that are inherently uncertain. These judgements and estimates affect reported
amounts and disclosures; and actual results could differ from these estimates.
Significant judgements and estimates are as follows:

Decrease of inventories to net realisable value

In determining an decrease of inventories to net realisable value, the management

makes judgement and estimates net realisable value of inventory based on the amount
the inventories are expected to realise. These estimates take into consideration
fluctuations of their selling price, cost and expenses directly relating to events
occurring after the end of the period. Also, the management makes judgement and

estimates expected loss from stock obsolescence based upon aging profile of
inventories and their current condition.

Property, plant and equipment and depreciation

In determining depreciation of plant and equipment, the management is required to
make estimates of the useful lives, units of production and residual values of the plant
and equipment and to review estimate useful lives, units of production and residual
values when there are any changes.

In addition, the management is required to review property, plant and equipment for

impairment on a periodical basis and record impairment losses when it is determined
that their recoverable amount is lower than the carrying amount. This requires
judgements regarding forecast of future revenues and expenses relating to the assets
subject to the review.

Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and unused
tax losses to the extent that it is probable that taxable profit will be available against

which the temporary differences and losses can be utilised. Significant management
judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and level of estimate future taxable profits.

77