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Notes to the Consolidated Financial Statements

31st March 2017

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

(e) Recognition of deferred income tax assets

According to the accounting policy as stated in Note 2.20, a deferred income tax asset is
recognised to the extent that it is probable that future taxable profit will be available against which
the deductible temporary differences and tax losses can be utilised, and it is measured at the tax
rates that are expected to apply when the related deferred income tax asset is realised.

In determining the deferred income tax asset to be recognised, management is required to
estimate the realisation of deferred tax assets. Any difference between these estimates and
the actual outcome will impact the Group’s result in the period in which the actual outcome is
determined.

(f) Provision for other liabilities and charges

Provisions are recognised when the Group has a present legal or constructive obligation as a
result of past events. Significant judgement is required in determining the provision for liabilities
and charges. The Group’s management determines the provision for liabilities and charges by
estimating the present value of the expenditures expected to be required to settle the obligation.
This assessment requires the use of estimation.

5 REVENUE AND SEGMENT INFORMATION

Revenues recognised during the year are as follows:

2017 2016
HK$’000 HK$’000

Consumer electronic products 2,100,142 2,879,104

(a) Segment analysed by products

The senior management (being the chief operating decision-maker) has determined the operating
segments based on the reports reviewed by the management. The chief operating decision-
makers have been identified as the executive directors and senior management who directly report
to the executive directors. The executive director and senior management reviewed the Group’s
internal reporting to assess performance and allocate resources. The management’s approach has
been used for the operating segment reporting.

The Group mainly operates in the People’s Republic of China (the “PRC”), Hong Kong and
Taiwan and is principally engaged in designing, manufacturing and selling of consumer electronic
products.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2017 75