NOTES TO THE CONSOLIDATED FINANCIAL  STATEMENTS  (RMB AND US$ AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)  3.  Significant accounting judgments, estimates and assumptions (cont’d) 3.2  Estimates and assumptions (cont’d) Allowance for doubtful accounts Inventory provision Fair value measurement of financial instruments Withholding tax The Group makes allowances for doubtful debts based on an assessment of the recoverability of trade and other  receivables. Allowances are applied to trade and other receivables where events or changes in circumstances  indicate that the balances may not be collectible. The identification of doubtful debts requires the use of judgment  and estimates. Judgment is required in assessing the ultimate realization of these receivables, including the current  creditworthiness, past collection history of each customer and on-going dealings with them. Where the expectation is  different from the original estimate, such difference will impact the carrying value of trade and other receivables and  doubtful debts expenses in the period in which such estimate has been changed. The carrying amounts of allowance  for doubtful accounts as of December 31, 2012 and 2013 were Rmb 44,304 and Rmb 29,808 (US$4,871) respectively. Management reviews the inventory listing on a periodic basis. This review involves comparison of the carrying value  of the inventory items with the respective net realizable value. The purpose is to ascertain whether an allowance is  required to be made in the financial statements for any obsolete and slow-moving items. The carrying amounts of  inventory provision as at December 31, 2012 and 2013 were Rmb 126,398 and Rmb 105,610 (US$17,256) respectively. When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be  measured based on quoted prices in active markets, their fair value is measured using valuation techniques including  the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not  feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such  as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair  value of financial instruments. The China’s Unified Enterprise Income Tax Law (“CIT law”) also provides for a tax of 10% to be withheld from dividends  paid to foreign investors of PRC enterprises. This withholding tax provision does not apply to dividends paid out of  profits earned prior to January 1, 2008. Beginning on January 1, 2008, a 10% withholding tax is imposed on dividends  paid to the Company, as a non-resident enterprise, unless an applicable tax treaty provides for a lower tax rate and  the Company will recognize a provision for withholding tax payable for profits accumulated after December 31, 2007  for the earnings that the Company does not plan to indefinitely reinvest in the PRC enterprises. The carrying amounts  of withholding tax provision as of December 31, 2012 and 2013 are Rmb 118,078 and Rmb 141,172 (US$23,067)  respectively. The Company estimated the withholding tax by taking into consideration the dividend payment history of Yuchai and  the operating cash flow needs of the Company. China Yuchai International Limited | Annual Report 2013 67