Vtech 2012 Annual Report Download - page 67

65
VTech Holdings Ltd Annual Report 2012
23 Material Related Party Transactions
Remuneration for key management personnel of the Group,
including amounts paid to the Directors of the Company and the
five highest paid individuals, is disclosed in note 3 to the financial
statements.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation. In the normal course of business and
on normal commercial terms, the Group undertakes certain
transactions with its associates. None of these transactions were
material to the Group’s results.
24 Possible Impact of Amendments, New
Standards and Interpretations Issued but
not yet Effective for the Annual Accounting
Period ended 31 March 2012
Up to the date of issue of these financial statements, the IASB has
issued a number of amendments, new standards and new
interpretations which are not yet effective for the accounting
period ended 31 March 2012 and which have not been adopted in
these financial statements.
Of these developments, the following relate to matters that may
be relevant to the Group’s operations and financial statements:
Effective for
accounting
periods
beginning
on or after
Amendments to IFRS 7 Financial instruments
Disclosures – Transfer of financial assets 1 July 2011
Amendments to IAS 1 Presentation of
financial statements – Presentation of items
of other comprehensive income 1 July 2012
Amendments to IAS 12 Income taxes –
Deferred tax: Recovery of
underlying assets 1 January 2012
IFRS 10 Consolidated financial statements 1 January 2013
IFRS 13 Fair value measurement 1 January 2013
IAS 27 Separate financial statements (2011) 1 January 2013
IAS 28 Investments in associates and
joint venture (2011) 1 January 2013
IAS 19 (Revised) Employee benefits 1 January 2013
IFRS 9 Financial instruments 1 January 2015
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 while the adoption of them may result
in new or amended disclosures, it is unlikely to have a significant
impact on the Group’s results of operations and financial position.
25 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 16, 17 and 19 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 fair value less costs to sell 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 these 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.