13/04/13
Research Report: Estimates and Accounting Policy Judgement

Address: Board Of Directors of Super Retail Group Ltd
Constructed by: Jennifer Jerram
Words: 2400
This Report was commissioned on the request of the Board in relation to ASIC’s press release: ‘12-140MR ASIC’S areas of focus for 30 June 2012 financial report’. A review of the relevant disclosures made in Super Retail Group Ltd’s 2012 Annual Report is assessed against relevant policies that relate to element 8, estimates and accounting policy judgements under ASIC’s press release.
Executive Summary
This Report was commissioned on the request of the Board in relation to ASIC’s press release: ‘12-140MR ASIC’S areas of focus for 30 June 2012 …show more content…

There is a need for judgement when determining cash-generating assets (paras. 68). Paragraph 30-57 outlines the associated requirements for calculating value-in-use. Paragraph 30.a specifically identifies the need for an estimate of future cash flows that the entity expects to generate from the asset. These cash flow projections are outlined in paragraph 33.a, where it is based on reasonable and supportable assumptions made by management’s estimates, re-stated further in paragraph 34, where this assumption is based on the difference between past cash flow predictions and actual cash flow amounts. These projections need to be consistent with previous projections. Paragraph 38 continues to detail the significance for management to use the appropriate assumption that would best reflect management’s estimates of economic conditions that will continue throughout the assets useful life. When calculating the value-in-use, there is a need to determine a discount rate and under paragraph 55 the rate is a pre-tax rate. Paragraph 126-137 states that entities should be encouraged to disclose the assumptions and various estimates taken in order to determine the CGU recoverable amount during the period. Paragraph 134 requires that a disclosure of the group’s key assumptions, description of managements approach to identifying these assumptions, the period over which they were made, justification of the growth rate used to calculate the future cash flow as well as the discount rate