79 AGL Energy Limited Annual Report 2012 Note 2 – Significant accounting judgements, estimates  and assumptions Impairment of goodwill and other intangibles with indefinite  useful lives Allowance for doubtful debts Business combinations Unbilled revenue Exploration and evaluation expenditure  The Standard defines significant influence and provides guidance  on how the equity method of accounting is to be applied. It also  prescribes how investments in associates and joint ventures  should be tested for impairment.  AASB 128 will be mandatory for the consolidated entity’s  30 June 2014 financial statements. The potential impact on  the consolidated entity’s financial statements has not yet been  determined.  Management has identified the following critical accounting policies  for which significant judgements, estimates and assumptions are  made. Actual results may differ from these estimates under  different assumptions and conditions and may materially affect  financial results or the financial position reported in future periods. The consolidated entity determines whether goodwill and other  intangibles with indefinite useful lives are impaired at least on an  annual basis. This requires an estimation of the value in use of the  recoverable amount of the cash-generating units, using a value in  use discounted methodology, to which the goodwill and intangibles  with indefinite useful lives are allocated. The assumptions used in  the estimation of recoverable amount are discussed in Note 22. Acquisitions of subsidiaries and businesses are accounted for using  the acquisition method. This method requires the application of fair  values for both the consideration given and the assets and liabilities  acquired. The calculation of fair values is often based on estimates  and judgements including future cash flows, revenue streams and  value in use calculations. The collectability of trade receivables is reviewed on an ongoing  basis. An allowance for doubtful debts is established when there  is objective evidence that the consolidated entity will not be able  to collect all amounts due. Management uses its judgement in  determining the level of doubtful debt provisioning, taking into  account the historic analysis of bad debt trends and the prevailing  economic conditions. Refer to Note 13 for further details. The consolidated entity recognises revenue from gas and electricity  services once the gas and/or electricity has been consumed by the  customer. Customers are billed on a periodic and regular basis.  Management estimates customer consumption between the last  invoice date and the end of the reporting period when determining  gas and electricity revenue for the financial period. Various  assumptions and financial models are used to determine the  estimated unbilled consumption. The carrying amount of unbilled  revenue is disclosed in Note 13. The consolidated entity’s policy for exploration and evaluation  expenditure is stated in Note 1(p). The application of this policy  requires management to make certain estimates and assumptions  as to future events and circumstances, particularly in relation to the  assessment of whether economic quantities of reserves have been  found. Any such estimates and assumptions may change as new  information becomes available. If, after having capitalised  exploration and evaluation expenditure, management concludes  that the capitalised expenditure is unlikely to be recovered by  future exploitation or sale, then the relevant capitalised amount  will be written off to the income statement. Fair value of financial instruments Management uses their judgement in selecting an appropriate  valuation technique for financial instruments not quoted in an  active market. Valuation techniques commonly used by market  practitioners are applied. For derivative financial instruments,  assumptions are made based on quoted market rates adjusted for  specific features of the instrument. Other financial instruments are  valued using a discounted cash flow analysis based on assumptions  supported, where possible, by observable market prices and rates.  Refer to Note 53 for further details. > AASB 2011-7  Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards is effective for annual reporting periods beginning on or after  1 January 2013.  > AASB 2011-9  Amendments to Australian Accounting Standards  – Presentation of Items of Other Comprehensive Income  is  effective for annual reporting periods beginning on or after  1 July 2012.  > AASB 1053  Application of Tiers of Australian Accounting  Standards  and AASB 2010-2  Amendments to Australian  Accounting Standards arising from Reduced Disclosure  Requirements > AASB 2012-2  Amendments to Australian Accounting  Standards – Disclosures – Offsetting Financial Assets and  Financial Liabilities > AASB 2012-3  Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities  > AASB 2012-5  Amendments to Australian Accounting Standards  arising from Annual Improvements 2009-2011 Cycle > AASB 2011-4  Amendments to Australian Accounting  Standards to Remove Individual Key Management Personnel  Disclosure Requirements > AASB 2010-8  Amendments to Australian Accounting  Standards – Deferred Tax: Recovery of Underlying Assets  In addition to the above recently issued Standards, the following  new and amendments to Standards are also applicable in future  years. It is not expected these Standards will materially impact  the consolidated entity’s financial statements upon adoption.  The amendments will be mandatory for the consolidated entity’s  30 June 2013 financial statements. The potential impact on the  consolidated entity’s financial statements has not yet been  determined.   The amendments require entities to present separately the items  of other comprehensive income that would be reclassified to  profit or loss in the future if specific conditions are met from  those that would never be reclassified to profit or loss. Tax  on items in other comprehensive income is also required to be  allocated on the same basis.  These amendments arise from the issuance of the IASB Standard  Presentation of Items of Other Comprehensive Income  (Amendments to IAS 1)  in June 2011.  The amendments, which will be mandatory for the consolidated  entity’s 30 June 2014 financial statements, are not expected to  have any significant impact on the financial statements.  AASB 2011-7 gives effect to many consequential amendments  to a number of Standards and Interpretations arising from the  issuance of the new consolidation and joint arrangements  Standards.