53
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
2.
Significant accounting policies
(continued)
2.2 Revenue recognition
(continued)
The Group recognises revenue when the amount of revenue and related cost can be reliably
measured, it is probable that the collectability of the related receivables is reasonably assured and
when the specific criteria for each of the Group’s activities are met as follows:
(i)
Sale of goods
Revenue from sale of goods is recognised when the Group has delivered the products to
the customer, the customer has accepted the products and the collectability of the related
receivables is reasonably assured.
(ii)
Rendering of services
Repair and overhaul services
Revenue from repair and overhaul services is recognised in the period in which the services
are rendered and accepted by customers, hence, advances from customers are deferred and
classified as “deferred revenue” under “trade and other payables”. Labour and overhead
costs incurred relating to reconditioning services are deferred and classified as “deferred
cost” under “inventories” until the revenue is recognised. Unbilled revenue on completed
services is recognised as “accrued revenue” under “trade and other receivables”.
Maintenance service
Revenue from maintenance service is recognised over the period in which the services are
rendered, by reference to completion of the specific transaction assessed on the basis of
the actual service provided as a proportion of the total service to be performed. Advances
from customers are deferred and classified as “deferred revenue” under “trade and other
payables”. Labour and overhead costs incurred relating to maintenance services are deferred
and classified as “deferred cost” under “inventories” until the revenue is recognised. Unbilled
revenue on completed services is recognised as “accrued revenue” under “trade and other
receivables”.
(iii)
Construction contracts
Please refer to the paragraph 2.9 “Construction contracts” for the accounting policy for
revenue from construction contracts.
(iv)
Interest income
Interest income is recognised using the effective interest method.
(v)
Dividend income
Dividend income is recognised when the right to receive payment is established.
(vi)
Rental income
Rental income from operating lease (net of any incentives given to the lessees) is recognised
on a straight-line basic over the lease term.
2.3 Government grants
Grants from the government are recognised as a receivable at their fair value when there is
reasonable assurance that the grant will be received and the Group will comply with all the attached
conditions. Government grants receivable are recognised as income over the periods necessary to
match them with the related costs which they are intended to compensate, on a systematic basis.
Government grants relating to expenses are shown separately as other gains-net.
