Page 56 - ar2012

52 GoodLand Group Limited
3 Critical Accounting Estimates, Assumptions and Judgements (cont’d)
(i) Critical accounting estimates and assumptions (cont’d)
useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or
non-strategic assets that have been abandoned or sold. The carrying amount of the Group’s depreciable
property, plant and equipment as at 30 September 2012 was S$1,298,860 (2011: S$1,206,326).
A 10% differences in the expected useful life of these assets from management’s estimates would result in
increasing/decreasing the Group’s depreciable property, plant and equipment by approximately S$14,000
(2011: S$12,500).
(ii) Critical judgements made in applying accounting policies
Impairment of Trade and Other Receivables
Management reviews its receivables annually for objective evidence of impairment. Signifcant fnancial
diffculties of the debtor, the probability that the debtor will enter bankruptcy, and default or signifcant
delay in payments are considered objective evidence that a receivable is impaired. In determining this,
management makes judgements as to whether there is observable data indicating that there has been a
signifcant change in the debtor’s ability to pay, or whether there have been signifcant changes with an
adverse effect in the technological, market, economic or legal environment in which the debtor operates.
Where there is objective evidence of impairment, management makes judgements as to whether an
impairment loss should be recorded in proft or loss. In determining this, management uses estimates
based on historical loss experience for assets with similar credit risk characteristics. The methodology and
assumptions used for estimating both the amount and timing of future cash fows are reviewed regularly to
reduce any differences between the estimated loss and actual loss experience. During the current fnancial
year ended 30 September 2012, the Group write off bad debts of other receivables of Nil (2011: S$3,261).
The carrying amount of trade and other receivables of the Group as at 30 September 2012 is S$20,165,663
(2011: S$16,177,911).
Classifcation of Development Properties for Sale
TheGroup recognises revenueonproperty development projects basedon thecompletionandpercentage
of completion method. In determining this, management makes judgements to the expected date of
completion of the project and when the risks and ownership for the Group’s development properties will be
transferred to third parties.
The carrying amount of the Group’s development properties which will be realised within the next 12 months
and after 12 months as at 30 September 2012 is S$19,903,766 (2011: S$3,646,346) and S$42,794,775 (2011:
S$44,791,352) respectively.
Transfers of Risk and Rewards of Ownership on Sales of Property under Development
As described in Note 2 to the fnancial statements, the Group’s policy on recognition of revenue in relation
to sales of property under development which qualify as sales of goods depends on whether:
• there is continuous transfer of risk and reward of ownership to the buyer of the property under
development; or
• risk and rewards of ownership of the property transfer at a single point of time.
In determining the point of transfer of risk and rewards of ownership, the Group reviews the legal terms of
the sales contracts together with the Accompanying Note to INT FRS 115 that explains the application of
the Interpretation to property development sales in Singapore.
Based on judgement exercised, revenues of S$18,245,106 (2011: S$18,305,336) were recognised during the
fnancial year for agreements where there was continuous transfer of risk and rewards of ownership of the
property sold, and revenues of S$37,727,358 (2011: S$12,106,000) were recognised for agreements where
risk and rewards of ownership transferred at a single point of time during the fnancial year.
Notes to the Financial Statements
30 September 2012