Home' Ansell annual report : Ansell Annual Report 2018 Contents Notes to the Financial Statements continued
Accounting estimates and judgements
The preparation of consolidated financial statements in conformity with Australian generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the reported period. The estimates and associated assumptions are based on historical experience and various factors that are believed
to be reasonable under the circumstances and are reviewed on an ongoing basis. Actual results could differ from these estimates.
Recognising the increasing complexity and difficulty in reliably estimating the useful life of product and technology development costs,
the Company has determined that expensing development costs as incurred will generally be more appropriate. Consistent with this
determination, previously capitalised development costs have also now been expensed. Refer to Note 3 (b) for details of the financial impact.
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.
The key estimates and assumptions that may have a significant impact on the financial statements are as follows:
A business acquisition requires judgement with respect to the determination of the fair value of purchase consideration given and the
fair value of identifiable assets and liabilities acquired. Many of these assets and liabilities either given up or acquired are not normally
traded in active markets, and thus management judgement is required in determining their fair values. Management judgement is also
required in ascertaining the assets and liabilities, which should be recognised, in particular with respect to intangible assets such as
brand names, customer relationships, patents and trademarks and contingent liabilities.
Current asset provisions
In the course of normal trading activities, management uses its judgement in establishing the net realisable value of various elements
of working capital – principally inventory and accounts receivable. Provisions are established for obsolete or slow moving inventories
and bad or doubtful receivables. The actual level of obsolete or slow moving inventories and bad or doubtful receivables in future
periods may be different from the provisions established and any such differences would affect future earnings of the Group.
Property, plant and equipment and definite life intangible assets
The Group’s property, plant and equipment and intangible assets, other than indefinite life intangible assets, are depreciated/amortised
on a straight-line basis over their useful economic lives. Management reviews the appropriateness of useful economic lives of assets at
least annually and any changes to useful economic lives may affect prospective depreciation rates and asset carrying values.
Impairment of goodwill and brand names
The Group tests whether goodwill and brand names are impaired at least annually, or more frequently if events or changes in circumstances
indicate that their carrying values may be impaired, in accordance with the accounting policy on intangible assets. The policy requires the
use of assumptions in assessing the carrying values of CGUs. These assumptions are detailed in Note 9.
The Group operates in a number of tax jurisdictions and needs to consider their varying complexities, differing tax rules and the
changing tax environments. The Group has processes to assess and manage these issues including the use of external tax advisors.
The reviews undertaken to determine whether a deferred tax asset should be recognised in jurisdictions where unbooked tax losses
exist and in assessing the recoverability of booked tax losses, involve the use of judgement and estimates in assessing the projected
future trading performances of relevant operations. These judgements and estimates are subject to risk and uncertainty hence there
is a possibility that changes in circumstances will alter expectations, which may impact on the amount of the deferred tax asset in
respect of tax losses recognised on the Balance Sheet. In such circumstances the carrying amount of this asset may require adjustment
resulting in a corresponding credit or charge to the Income Statement.
Defined benefit superannuation plans
Various actuarial assumptions are utilised in the determination of the Group’s defined benefit superannuation plan obligations.
These assumptions are detailed in Note 12.
Other accounting policies
Other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial
statements are provided throughout the notes to the financial statements.
1. Summary of Significant Accounting Policies continued
Ansell Limited Annual Report 2018
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