NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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Key source of estimation uncertainty (cont’d)
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets at each
reporting date. Goodwill and intangible assets are tested for impairment annually and at other times when
such indicators exist. Other non-financial assets are tested for impairment when there are indicators that
the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset
or cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to
sell and its value in use.
When value in use calculations are undertaken, management must estimate the expected future cash
flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the
present value of those cash flows. The carrying amounts of the property, plant and equipment, goodwill
and intangible assets are disclosed in notes 10, 11 and 12 respectively.
Construction contracts
The Group recognises contract revenue by reference to the stage of completion of the contract activity
at the end of the reporting period, when the outcome of a construction contract can be estimated
reliably. The stage of completion is measured by reference to the professional’s certification of value of
work done to-date or by reference to survey of work performed.
Significant assumptions are required in determining the stage of completion, the extent of the contract
costs incurred, the estimated total contract revenue and contract costs, as well as the recoverability of
the contracts. Total contract revenue also includes an estimation of the variation works and claims that
are recoverable from the customers. In making these estimates, the Group relied on past experience and
knowledge of the projectmanagers. The carrying amounts of assets and liabilities arising fromconstruction
contracts at the end of the reporting period are disclosed in note 15 to the financial statements.
Estimated useful lives of property, plant and equipment
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their
estimated residual value, if any, using the straight-line method over their estimated useful lives. The
Group reviews the estimated useful lives and residual values of the assets annually in order to determine
the amount of depreciation expense to be recorded during the reporting period. The useful lives are
based on the Group’s historical experience with similar assets and taking into account anticipated
technological changes. The accounting policy and carrying amount for property, plant and equipment
at 30 June 2016 are disclosed in note 2(f) and note 10 respectively.
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ISOTEAM LTD.
ANNUAL REPORT 2016
