Annual Reports Keepmoat Homes Annual Report 2018 | Page 72

Principal accounting policies – Company
Principal accounting policies – Company
for the year ended 31 March 2018
Critical accounting estimates and assumptions
The preparation of financial statements in conformity with FRS101 requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Company’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements, are set out below:
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed as follows:
Retirement benefits
I  n determining the valuation of defined benefit schemes’ assets and liabilities, a number of key assumptions have been
made. The key assumptions, which are given below, are largely dependent on factors outside the control of the Company:
  return on plan assets;
  inflation rate;
  life expectancy;
  discount rate; and
  salary and pension growth rates.
The Company is exposed to risks through its defined benefit schemes if actual experience differs to the assumptions used
and through volatility in the plan assets. Details of the assumptions used, and associated sensitivities are included in note 41.
Carrying value of investments
 etermining whether investments are impaired requires an estimate of the future discounted cash flows of each
D
investment. Discounted cash flows and assumptions (including discount rates, timing of cash flows and growth prospects)
are inherently subjective and largely dependent on factors outside the control of the company.
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