b'NOTES TO THE FINANCIAL STATEMENTS >for the year ended 30 June 2019NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONSCONTINUEDSHARE-BASED PAYMENT TRANSACTIONS INCOME TAXThe consolidated entity measures the cost of equity-settledThe consolidated entity is subject to income taxes in the transactions with employees by reference to the fair value ofjurisdictions in which it operates, including Cambodia, the equity instruments at the date at which they are granted.Vietnam and Hong Kong. Significant judgement is required The fair value of options is determined by using an amendedin determining the provision for income tax. There are many Black-Scholes Merton model taking into account the termstransactions and calculations undertaken during the ordinary and conditions upon which the instruments were granted.course of business for which the ultimate tax determination The accounting estimates and assumptions relating to equity- is uncertain. The consolidated entity recognises liabilities settled share-based payments would have no impact on thefor anticipated tax audit issues based on the consolidated carrying amounts of assets and liabilities within the nextentitys current understanding of the tax law. Where the annual reporting period but may impact profit or loss final tax outcome of these matters is different from the and equity. carrying amounts, such differences will impact the current The value of shares issued to employees is based on the marketand deferred tax provisions in the period in which such value of shares traded on the ASX at the time of issue. determination is made.ESTIMATION OF USEFUL LIVES OF ASSETS EMPLOYEE SHARE TRUST AND OPTION TRUSTThe consolidated entity determines the estimated useful livesThe consolidated entity has engaged an external unrelated and related depreciation and amortisation charges for its third party to form trusts to administer the Groups employee property, plant and equipment and finite life intangible assets. share schemes. The consolidated entity has no ownership The useful lives could change significantly as a result ofinterest in the trusts and the trusts are not consolidated technical innovations or some other event. The depreciationas they are not controlled by the consolidated entity. In and amortisation charge will increase where the useful livesdetermining whether or not the consolidated entity had are less than previously estimated lives, or technically obsoletecontrol over the trusts, management considered the trusts or non- strategic assets that have been abandoned or sold willstatus as an independent trust with an independent trustee, be written off or written down. which holds the assets for the benefit of the employees rather than the consolidated entity.The casino licence is stated at cost less impairment losses, if any. The licence issued by the royal government of CambodiaALLOWANCE FOR EXPECTED CREDIT LOSSESis renewable annually and deemed to be with indefinite usefulThe consolidated entity reviews the collectability of trade life, and therefore should not be amortised. Its useful lifereceivables on an ongoing basis. Debts which are known to is reviewed at each reporting period to determine whetherbe uncollectable are written off by reducing the carrying events and circumstances continue to exist to supportamount directly. An allowance for expected credit losses is indefinite useful life assessment. Impairment testing byraised when there is objective evidence that the consolidated comparing its recoverable amount with its carrying amountentity will not be able to collect all amounts due according to is performed annually. In the event that the expected futurethe original terms of the receivables. The amount of expected economic benefits are no longer probable of being recovered,credit loss is determined using the simplified approach which the licences are written down to their recoverable amount. uses a lifetime expected loss allowance. The expected loss rates GOODWILL AND OTHER INDEFINITE LIFEused in measuring the expected credit losses are based on INTANGIBLE ASSETS historical loss rates, adjusted to reflect current and forward-looking information on macroeconomic factors affecting The consolidated entity tests annually, or more frequentlythe ability of the debtors to settle the receivables. These if events or changes in circumstances indicate impairment,factors include significant financial difficulties of the debtor, whether goodwill and other indefinite life intangible assetsprobability that the debtor will enter bankruptcy or financial have suffered any impairment, in accordance with thereorganisation, and default or delinquency in payments are accounting policy stated in Note 1. The recoverable amountsconsidered indicators that the trade receivables are impaired. of cash-generating units have been determined based on theThe amount of the impairment allowance is the difference higher of value-in-use calculations and fair value less costs between the assets carrying amount and the present valueof disposal. These calculations require the use of assumptions,of estimated future cash flows.including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.50 DONACO INTERNATIONAL LIMITED 2019 ANNUAL REPORT'