3.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
3.10
Government grants
Government grants, including non-monetary grants, shall not be recognised until there is reasonable
assurance attaching to the grants will be complied with and the grants will be received.
Grants related to assets are set up as deferred income and recognised as income on a systematic
basis over the estimated useful lives of the assets. Grants related to expenses are recognised as
income in the period the grants become receivable. Grants related to future costs are deferred and
recognised in the profit or loss in the same period as the related costs.
3.11
Provision for liabilities and warranty costs
Provisions for liabilities are recognised when the Group has a present obligation as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed
at the end of each reporting period and adjusted to reflect the current best estimate. Where the
effect of the time value of money is material, the amount of a provision is the present value of the
expenditure expected to be required to settle the obligation. When discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.
Provision for warranty costs is made in respect of goods sold and still under warranty at the end of
the reporting period based on the terms of warranty and historical claim experience.
3.12
Income Recognition
Income is recognised to the extent that it is probable that the economic benefits will flow to the Group
and to the Company and when the revenue can be reliably measured. Income is measured at the
fair value of consideration received or receivable.
Sale of goods
Revenue from sales of goods is recognised upon transfer of risks and rewards of ownership to the
buyer of the goods, based on invoiced value, net of discounts and returns.
Revenue from services
Revenue from services is recognised upon rendering of services.
Dividend income
Dividend income is recognised when the right to receive payment is established.
Interest income
Interest income is recognised on an accrual basis using the effective interest method.
3.13
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised during the period of time that is necessary to complete and prepare the asset
for its intended use or sale. Capitalisation of borrowing costs commences when the activities to
prepare the asset for its intended use or sale are in progress and the expenditures and borrowing
costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for
their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist
of interest and other costs that the Company incurred in connection with the borrowing of funds.
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2014 (CONT’D)
Pentamaster Corporation Berhad
(572307-U)
•
Annual Report 2014
56
