Vtech 2010 Annual Report Download - page 67

VTech Holdings Ltd Annual Report 2010 65
27 Possible Impact of Amendments, New
Standards and Interpretations Issued
but not yet Effective for the Annual
Accounting Period ended 31 March 2010
Up to the date of issue of these financial statements, the IASB
has issued the following amendments, new standards and
interpretations, which have not been adopted since they are only
effective after 31 March 2010.
The Group is in the process of making an assessment of
what the impact of these amendments, new standards and
new interpretations is expected to be in the period of initial
application. So far it has concluded that the adoption of them
is unlikely to have a significant impact on the Group’s results of
operations and financial position.
Effective for
accounting
periods
beginning
on or after
IFRS 3 (Revised), Business combinations 1 July 2009
Amendments to IAS 27, Consolidated 1 July 2009
and separate financial statements
Amendments to IAS 39, 1 July 2009
Financial instruments:
Recognition and measurement –
Eligible hedged items
Improvements to IFRSs 2009 1 July 2009 or
1 January 2010
28 Accounting Estimates and Judgements
The presentation of financial statements in conformity with
IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets, liabilities, income and expenses.
Notes 17, 18 and 20 contain information about the assumptions
and their risk factors relating to pension scheme obligations, fair
value of share options granted and financial instruments. Other
key sources of estimation uncertainty are as follows:
Provision for defective goods returns
The Group recognises provision for expected return claims,
which included cost of repairing or replacing defective goods,
loss of margin and cost of materials scrapped, based on past
experience of the level of repairs and returns. The Group uses
all available information in determining an amount that is a
reasonable approximation of the costs including estimates
based on reasonable historical information and supportable
assumptions. Changes in these estimates could have a significant
impact on the provision and could result in additional charges or
reversal of provision in future years.
Estimated useful lives of tangible assets
The Group estimates the useful lives of tangible assets based on
the periods over which the assets are expected to be available
for use. The Group reviews annually their estimated useful
lives, based on factors that include asset utilisation, internal
technical evaluation, technological changes, environmental
and anticipated use of the assets tempered by related industry
benchmark information. It is possible that future results of
operation could be materially affected by changes in these
estimates brought about by changes in factors mentioned.
A reduction in the estimated useful lives of tangible assets would
increase depreciation charges and decrease non-current assets.
Impairment of assets
The Group reviews internal and external sources of information
at each balance sheet date to identify indications that assets may
be impaired or an impairment loss previously recognised no
longer exists or may have decreased. The Group estimates the
asset’s recoverable amount when any such indication exists. The
recoverable amount of an asset, or of the cash-generating unit to
which it belongs, is the greater of its net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of time value of money
and the risks specific to the assets. The preparation of projected
future cash flows involves the estimation of future revenue and
operating costs which are based on reasonable assumptions
supported by information available to the Group. Changes in the
estimates would result in additional impairment provisions or
reversal of impairment in future years.
Deferred tax assets
The Group reviews the carrying amounts of deferred taxes at
each balance sheet date and consider the amount of deferred tax
assets to the extent that it is no longer probable that sufficient
taxable income will be available to allow all or part of the
deferred tax assets to be utilised. However, there is no assurance
that the Group will generate sufficient taxable income to allow all
or part of its deferred tax assets to be utilised.