Notestothefinancialstatements
For the financial year ended31December 2015
2.
Summaryof significant accountingpolicies (cont’d)
2.22
Contingencies
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain futureeventsnotwhollywithin the control of theGroup; or
(b)
apresent obligation that arises frompast eventsbut isnot recognisedbecause:
(i)
it isnot probable that anoutflowof resourcesembodyingeconomicbenefitswill be required to settle theobligation; or
(ii)
theamount of theobligation cannot bemeasuredwith sufficient reliability.
A contingent asset is a possible asset that arises from past events andwhose existencewill be confirmed only by the occurrence or non-occurrence of one or
moreuncertain futureeventsnotwhollywithin the control of theGroup.
Contingent liabilities andassets arenot recognisedon thebalance sheet of theGroup, except for contingent liabilities assumed inabusiness combination that
arepresent obligationsandwhich the fair values canbe reliably determined.
3.
Significant accounting judgementsandestimates
Thepreparationof theGroup’s financial statements requiresmanagement tomake judgements, estimatesandassumptions that affect the reportedamountsof
revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reportingdate. However, uncertainty about these assumptions and
estimates could result inoutcomes that requireamaterial adjustment to the carryingamount of theasset or liability affected in the futureperiods.
3.1
Judgementsmade inapplyingaccountingpolicies
In theprocessof applying theGroup’saccountingpolicies,management hasmade the following judgements, apart from those involvingestimations,whichhave
themost significant effect on theamounts recognised in the consolidated financial statements:
Determinationof functional currency
The Groupmeasures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional
currencies of the entities in theGroup, judgement is required to determine the currency thatmainly influences sales prices for goods and services and of the
countrywhose competitive forces and regulationsmainly determines the sales prices of its goods and services. The functional currencies of the entities in the
Grouparedeterminedbasedonmanagement’sassessment of theeconomicenvironment inwhich theentitiesoperateand theentities’ processof determining
salesprices.
Income taxes
Significant judgement is involved in determining theGroup-wide provision for income taxes. There are certain transactions and computations for which the
ultimate tax determination is uncertain during the ordinary course of business. TheGroup recognises liabilities for expected tax issues based on estimates
of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such
differences will impact the income tax and deferred tax provisions in the period inwhich such determination ismade. The carrying amount of the Group’s
income tax payables, deferred tax assets and deferred tax liabilities as at 31 December 2015 was $1,810,000, $360,000 and $150,000 (2014: $3,371,000,
$1,018,000 and$Nil), respectively.
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BAKERTECHNOLOGYlimited
ANNUAL REPORT 2015
