Cordlife Group Limited
Annual Report 2016
77
Notes to
The Financial Statements
for the financial year ended 30 June 2016
2.
Summary of significant accounting policies (cont’d)
2.30 Related parties (cont’d)
(b)
An entity is related to the Group and the Company if any of the following conditions applies :
(i)
The entity and the Company are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others);
(ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member);
(iii)
Both entities are joint ventures of the same third party;
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v)
The entity is a post-employment benefit plan for the benefit of employees of either the Company or
an entity related to the Company. If the Company is itself such a plan, the sponsoring employers
are also related to the Company;
(vi)
The entity is controlled or jointly controlled by a person identified in (a);
(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
3.
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities at the end of each reporting period. Uncertainty about these assumptions
and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset
or liability affected in the future periods.
3.1
Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management is of the opinion that there is no
instance of application of judgement which is expected to have a significant impact on the amounts recognised
in the consolidated financial statements, apart from those involving estimations described below.
3.2
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of
the reporting period are discussed below. The Group based its assumptions and estimates on parameters
available when the financial statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances arising beyond the control of the
Group. Such changes are reflected in the assumptions when they occur.
Revenue recognition
The Group recognises revenue from cord blood banking service contracts and cord lining banking service
contracts based on the stage of completion method. The stage of completion is measured in accordance with
the accounting policy stated in Note 2.23. Significant assumptions and estimates are required in determining
the total estimated costs. In making the assumptions, the Group evaluates them by relying on past experience
and evidence. Any significant change in the estimated costs over the remaining period would have a significant
impact on the revenue recognised. An increase/decrease in estimated storage costs over the remaining
contract period would reduce/increase the stage of completion to date, and hence would reduce/increase the
revenue recognised in the current period.
If the total estimated storage costs had been 5% higher than management’s current estimate, the total revenue
recognised arising from these contracts would have been $1,744,000 (2015: $1,729,000) lower.
