## 2. BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE (CONTINUED): 

(d) Use of estimates and judgements (continued): 

 The following is a summary of areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements: 

(i) Fair value of derivative financial instruments: 

 Derivative financial instruments are carried in the consolidated statements of financial position at fair value, with changes in fair value reflected in the consolidated statements of earnings. Fair values are estimated by reference to published price quotations or by using other valuation techniques. Financial instruments for which observable quoted prices are not available are subject to a high degree of uncertainty. 

(ii) Useful lives of property, plant and equipment: 

 The Company reviews estimates of the useful lives of property, plant and equipment on an annual basis and adjusts depreciation on a prospective basis, if necessary. 

(iii) Goodwill impairment: 

 The Company makes a number of estimates when calculating the recoverable amount of a cash-generating unit containing goodwill using discounted future cash flows or other valuation methods.These estimates take into account the control premium in determining the fair value less cost to sell. 

(iv) Asset impairment: 

 The Company must assess the possibility that the carrying amounts of tangible and intangible assets may not be recoverable. Management is required to make subjective assessments, linking the possible loss of value of assets to future economic performance, to determine the amount of asset impairment that should be recognized, if any. 

(v) Income taxes: 

 The calculation of income taxes requires judgement in interpreting tax rules and regulations. Deferred income tax assets are recorded to the extent that it is probable that there will be adequate taxable income in the future against which they can be utilized. 

(vi) Pension plans: 

 The cost of defined benefit pension plans is determined by means of actuarial valuations, which involve making assumptions about discount rates, the expected long-term rate of return on plan assets, future salary increases, mortality rates and the future increases in pensions. Because of the long-term nature of the plans, such estimates are subject to a high degree of uncertainty. 

(vii) Consolidation: 

See note 3 (a). 

 Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ from those estimates.The above estimates and assumptions are reviewed regularly. Revisions to accounting estimates are recognized in the period in which estimates are revised and in any future periods affected. 

