notes to the financial statements
for the financial year ended 31 December 2014 (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.25 Revenue recognition (continued)
(a)
Construction contracts (continued)
At the reporting date, the cumulative costs incurred plus recognised profit (less recognised loss) on each contract is compared against the progress
billings. Where the cumulative costs incurred plus the recognised profits (less recognised losses) exceed progress billings, the balance is presented as
‘amount due from customers on contracts’ within current assets. Where progress billings exceed the cumulative costs incurred plus recognised profits
(less recognised losses), the balance is presented as ‘amount due to customers on contracts’ within current liabilities.
Progress billings not yet paid by customers and retentions by customers are included within “trade and other receivables”.
(b)
Sale of goods
Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the profit or loss when the significant risks
and rewards of ownership have been transferred to the buyer.
(c)
Service income
Service income is recognised on an accrual basis when services have been rendered.
(d)
Dividend income
Dividend income is recognised when the right to receive payment is established.
(e)
Rental income
Rental income is recognised on a time proportion basis over the lease term.
(f)
Interest income
Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective interest rate applicable.
(g)
Management fee
Management fee is recognised on an accrual basis when service is rendered.
(h)
Hire of machinery and equipment
Income from hire of machinery and equipment is recognised on a time proportion basis over the term of hire.
(i)
Commission income
Commission income is recognised on an accrual basis when service is rendered.
2.26 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that
asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditure and
borrowing costs are incurred. Capitalisation of borrowing costs is suspended or ceased when substantially all the activities necessary to prepare the qualifying
asset for its intended use or sale are interrupted or completed.
All other borrowing costs are recognised in profit or loss using the effective interest method in the period they are incurred. Borrowing costs consist of interest
and other costs that the Group and the Company incurred in connection with the borrowing of funds.
83
Wah Seong Corporation Berhad • Annual Report 2014
