In the process of applying its accounting policies, the company is required to make certain estimates, judgements and assumptions that it believes are reasonable based on the information available. These judgements, estimates and assumptions affect the amounts of assets and liabilities at the date of the financial statements and the amounts of revenues and expenses recognised during the reporting periods presented.
Not all of these accounting policies require management to make difficult, subjective or complex judgements or estimates on an ongoing basis. The company evaluates its estimates using historical experience, consultation with experts and other methods considered reasonable in the particular circumstances. Actual results may differ significantly from the estimates, the effect of which is recognised in the period in which the facts that give rise to the revision become known.
The following paragraphs detail the estimates and judgements the company believes to have the most significant impact on the annual results under FRS 102:
Tangible fixed assets (TFA)
The estimated useful lives of TFA are based on management's judgement and experience. When management identifies that actual useful economic lives differ materially from estimates used to calculate depreciation, that charge is adjusted prospectively.
The company is required to evaluate the carrying values of TFA for impairment whenever circumstances indicate, in management's judgement, that the carrying value of such assets may not be recoverable.
Freehold land and buildings are valued at their market value. A formal valuation was carried out on 20th August 2020. Subsequent formal valuations will be carried out, if the directors consider that a material change has occurred.