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Notes to the Consolidated Financial Statements

31st March 2017

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

(b) 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.

(c) 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.

(d) Impairment of non-financial assets

At each balance sheet date, the Group and Company review 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

If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss
is recognised in the consolidated income statement whenever the carrying amount of an asset
exceeds its recoverable amounts. If an indication of impairment is identified, the Group is required
to estimate the recoverable value, representing the greater of the asset’s fair value less cost to sell
or its value in use. Changes in any of these estimates could result in a material change to the asset
carrying amount in the financial statements.

74 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017