Amal Ltd 2020-21

Amal Ltd | Annual Report 2020-21 Note 1 Significant accounting policies (continued) Estimation of uncertainties relating to the COVID-19 pandemic The manufacturing facility of the entity whichwas shut down in the last week of March 2020 due to country wide lockdown, resumed operations in a phased manner from the last week of April 2020 after obtaining requisite approvals. The Group has considered possible effects that may result from the COVID-19 pandemic in preparation of these Consolidated Financial Statements, including recoverability of inventories, trade receivables and other assets. In developing the assumptions relating to future uncertainties in the economic conditions due to the COVID-19 pandemic, it has, at the date of approval of these Consolidated Financial Statements, used relevant internal and external sources of information, including economic forecasts and expects that the carrying amounts of these assets are recoverable. The impact of the COVID-19 pandemic, including the current wave, may be different from that estimated as at the date of approval of these Consolidated Financial Statements. Critical estimates and judgements Preparation of the Consolidated Financial Statements require the use of accounting estimates, judgements and assumptions, which, by definition, will seldom equal the actual results. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the Consolidated Financial Statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the Consolidated Financial Statements. This note provides an overview of the areas that involves a higher degree of judgement or complexity and of items that are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the Consolidated Financial Statements. The areas involving critical estimates or judgements are: i) Estimation for income tax: Note 1 (f) ii) Estimation of useful life of tangible assets: Note 1 (h) iii) Estimation of provision for inventories: Note 1 (m) iv) Allowance for credit losses on trade receivable: Note 1 (k) v) Estimation of defined benefit obligation: Note 1 (s) vi) Impairment: Note 1 (n) Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.