Company: CHNR
Filing Date: 2025-01-27
Form Type: POS AM
Source: 0001079973-25-000143
Chunk: 231

Company: CHINA NATURAL RESOURCES INC
Filing Date: 2025-01-27
Form: POS AM
Chunk 231
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 applying the Group’s
accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant
effects on the amounts recognized in the financial statements.

Income taxes

The Group is subject to income taxes in
Hong Kong and the PRC. The Group carefully evaluates tax implications of its transactions in accordance with prevailing tax regulations
and makes tax provision accordingly. However, judgment is required in determining the Group’s provision for income taxes as there
are many transactions and calculations, of which the ultimate tax determination is uncertain, during the ordinary course of business.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact
on the income tax and deferred tax provision in the periods in which such determination is made.

Estimation uncertainty

Contract asset and intangible asset under IFRIC 12 Service Concession Arrangements – Discontinued Operations

The Group recognizes the consideration
received or receivable in exchange for the construction services as a contract asset and an intangible asset under a service concession
arrangement. However, if the Group is paid for the construction services partly by a cash consideration and partly by an intangible asset,
it is necessary to separately account for each component of the operator’s consideration. Both components of consideration received
or receivable initially are recognized at their respective fair values.

The segregation of the consideration for
a service concession arrangement between the contract asset component and the intangible asset component, if any, requires the Group
to make an estimate of a number of factors, which include, the fair value of the construction services, expected future water treatment
volume of the relevant water treatment plant over its service concession period, future guaranteed receipts and unguaranteed receipts,
and a discount rate in order to calculate the present value of those cash flows. These estimates, including revenue recognition of the
contract asset and intangible asset components are determined by the Group’s management based on their experience and assessment
of current and future market conditions. The carrying amounts of the intangible asset (“concession right”) and contract asset
at the end of the reporting period are disclosed in Notes 10 and 13, respectively.

Provision for expected credit losses on financial assets at amortized cost and contract assets – Discontinued Operations

The policy for provision for ECLs on contract assets and financial assets at amortized cost including trade receivables, other receivables and amounts due from related parties is based on an ECL model. A considerable amount of