68
GDS Global Limited Annual Report 2015
NOTES TO
FINANCIAL STATEMENTS
As at 30 September 2015
3
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY (cont’d)
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in Note 2,
management has not made any judgements that will have a significant effect on the amounts
recognised in the financial statements, apart from those involving estimations as discussed below.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year, are discussed below.
Allowance for trade and other receivables
The Group makes allowance for doubtful debts based on an assessment of the recoverability of
trade and other receivables where events or changes in circumstances indicate that the balances
may not be collectible. The estimation of allowance for doubtful debts requires the use of
estimates. Where the expectation is different from the original estimate, such differences will
impact the carrying value of trade and other receivables and doubtful debts expenses in the period
in which such estimate has been changed.
The Group commenced legal actions to recover trade receivables of $476,840 (2014: $422,416)
from a third party and the legal actions are still ongoing as at 30 September 2015. Management
was of the view that no allowance for doubtful debts was required as at 30 September 2014
and continues to hold the same view that no allowance is required as at 30 September 2015 as
management intends to recover the debts vigorously.
Based on management’s assessment, an allowance for trade and other receivables of $154,858
(2014: $160,634) was made as at 30 September 2015. The carrying amount of trade and other
receivables is disclosed in Note 7 to the financial statements.
Valuation of inventories
At the end of each reporting period, management assesses whether there is any objective
evidence that certain inventories are stated at cost which are above their net realisable value. If
so, these inventories are written down to their net realisable value. To determine whether there
is such objective evidence, management identifies inventories that are slow moving and considers
their physical conditions, market conditions and market prices for similar inventories. Based on
management’s assessment, no allowance for inventories is required as at 30 September 2015 and
2014. The carrying amount of inventories is disclosed in Note 8 to the financial statements.
