China Communications Services Corporation Limited Annual Report 2015
154
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
40. FINANCIAL RISK MANAGEMENT AND FAIR VALUES
(continued)
(f) Fair value
(continued)
(ii) Fair values of financial instruments carried at other than fair value
The fair values of financial assets and financial liabilities recorded at amortised cost are not materially different
from their carrying amounts, which are determined in accordance with generally accepted pricing models based
on discounted cash flow analysis.
The fair values of Group’s unquoted available-for-sale financial assets could not be reliably measured.
41. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
In determining the carrying amounts of certain assets and liabilities, the Group makes assumptions of the effects of
uncertain future events on those assets and liabilities at the end of the reporting period. These estimates involve
assumptions about such items as risk adjustment to cash flows or discount rates used, future changes in salaries and future
changes in prices affecting other costs. The Group’s estimates and assumptions are based on historical experience and
expectations of future events and are reviewed periodically. In addition to assumptions and estimations of future events,
judgements are also made during the process of applying the Group’s accounting policies. In addition to those disclosed in
note 20, other significant accounting estimates and judgements were summarised as follows:
(a) Construction contracts
As explained in notes 2(n) and 2(w) (i) revenue and profit recognition on an uncompleted project is dependent on
estimating the total outcome of the construction contract, as well as the work done to date. In addition, actual
outcomes in terms of total cost or revenue may be higher or lower than that estimated at the end of the reporting
period, which would affect the revenue and profit recognised in future years as an adjustment to the amounts
recorded to date.
(b) Impairment for trade and other receivables
The Group estimates impairment losses for trade and other receivables resulting from the inability of the customers
to make the required payments. The Group bases the estimates on customer credit-worthiness and historical write-
off experience. If the financial condition of the customers were to deteriorate, actual write-offs would be higher than
estimated.
(c) Impairment of long-lived assets other than goodwill
If circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, the asset may be
considered “impaired”, and an impairment loss may be recognised in accordance with accounting policy for
impairment of long-lived assets as described in note 2(l). The carrying amounts of long-lived assets are reviewed
periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These
assets are tested for impairment whenever events or changes in circumstances indicate that their recorded carrying
amounts may not be recoverable. When such a decline has occurred, the carrying amount is reduced to recoverable
amount. The recoverable amount is the greater of the fair value less costs of disposal and the value in use. In
determining the value in use, expected future cash flows generated by the asset are discounted to their present
value, which requires significant judgement relating to level of revenue and amount of operating costs. The Group
uses all readily available information in determining an amount that is a reasonable approximation of recoverable
amount, including estimates based on reasonable and supportable assumptions and projections of revenue and
amount of operating costs. Changes in these estimates could have a significant impact on the carrying amount of the
assets and could result in additional impairment charge or reversal of impairment in future periods.
