Creative 2015 Annual Report Download - page 32

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CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
2.19 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker.
2.20 Share capital and treasury shares
Ordinary shares are classied as equity. Incremental costs directly attributable to the issuance of new ordinary shares are
deducted against the share capital account.
Where the Company’s ordinary shares are repurchased (“treasury shares”), the consideration paid, including any directly
attributable incremental cost, is presented as a component within equity attributable to the Company’s equity holders, until
they are cancelled, sold or reissued.
When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account
if the shares are purchased out of capital of the Company, or against the retained earnings of the Company if the shares are
purchased out of earnings of the Company.
When treasury shares are subsequently sold or reissued pursuant to the employee share options and performance share plan,
the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net
of any directly attributable incremental transaction costs and related income tax, is recognised as a change in equity of the
Company.
2.21 Dividends to Company’s shareholders
Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.
3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
Estimates, assumptions 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.
(a) Revenue recognition
Allowances are provided for estimated returns and discounts. Management analyses historical returns, current economic trends and
changes in customer demand and acceptance of its products when evaluating the adequacy of the sales returns allowance. Such
allowances are adjusted periodically to reect actual and anticipated experience. When recognising revenue, the Group records estimated
reductions to revenue for customer and distributor programs and incentive offerings, including price protection, promotions, other
volume-based incentives and rebates. Signicant management judgement and estimates must be used in connection with establishing
these allowances in any accounting period. The Group may take action when necessary in response to market conditions to increase
customer incentive offerings, possibly resulting in an incremental reduction of revenue at the time the incentive is offered. The
Group’s net revenue for the nancial year ended 30 June 2015 was US$99,482,000 (2014: US$116,332,000).
(b) Impairment of loans and receivables
The Group assesses at each balance sheet date whether there is any objective evidence that a nancial asset is impaired.
To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of
insolvency or signicant nancial difculties of the debtor and default or signicant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash ows are estimated based on historical
loss experience for assets with similar credit risk characteristics.
NOTES TO THE FINANCIAL STATEMENTS
For the nancial year ended 30 June 2015