NOTES TO THE FINANCIAL STATEMENTS
Note 24: Critical accounting estimates and judgments (continued) The following critical accounting estimates or judgements were made in the process of applying the Consolidated Entity’s accounting policies that in management’s assessment can significantly affect the amounts recognised in the financial statements: Recognition of deferred tax assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilised. Impairment In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows. Useful lives of depreciable assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Lease liability The likelihood of exercising a lease extension option is subject to an assessment process by management. Inventories Management estimates the net realisable value of inventories, taking into account the most reliable evidence available at each reporting date. Inventory is classified as current based on being held for trading but the disclosure of the expected sale dates for products is subject to an estimate of future sales. Fair Value of financial instruments Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Note 25: Contingent assets and liabilities The Group has no contingent assets or liabilities. Note 26: Capital and leasing commitments The Company is a party to a lease of a commercial premises. The lease term is set to expire on 27 December 2022. The rent is $425,546 per year. The Company has a 1 year and a 5 year extension option.
I GO VITA GROUP LIMITED ANNUAL REPORT 2020-2021 66
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