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Notes to the Consolidated Financial Statements

31st March 2015

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below.

(a) Estimate of fair value of investment properties

The fair value of investment properties is determined by using valuation technique. Details of the
judgement and assumptions have been disclosed in Note 15.

(b) Estimate of useful lives of property, plant and equipment and intangible assets

The Group has significant property, plant and equipment and intangible assets. The Group is
required to estimate the useful lives of property, plant and equipment and intangible assets in order
to ascertain the amount of depreciation and amortisation charges for each reporting period.

The useful lives are estimated at the time of purchase of these assets after considering future
technology changes, business developments and the Group’s strategies. The Group performs
annual reviews to assess the appropriateness of the estimated useful lives. Such review takes
into account any unexpected adverse changes in circumstances or events, including declines
in projected operating results, negative industry or economic trends and rapid advancement in
technology. The Group extends or shortens the useful lives and/or makes impairment provisions
according to the results of the review.

(c) Impairment of non-financial assets

At each balance sheet date, the Group reviews internal and external sources of information to
identify indications that the following assets may be impaired or an impairment loss previously
recognised no longer exists or may have decreased:

– property, plant and equipment
– leasehold land and land use rights
– intangible assets
– investments in subsidiaries

ALCO HOLDINGS LIMITED ANNUAL REPORT 2015 57