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BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
2. Summaryof significant accounting policies (cont’d)
2.18 Financial guarantee
A financial guarantee contract is a contract that requires the issuer tomake specifiedpayments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the
terms of a debt instrument.
Financial guarantees are recognised initiallyat fair value. Subsequent to initial recognition, financial guarantees
are recognised as income in the profit or loss over the period of the guarantee. If it is probable that the liability
will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher
amount with the difference charged to the profit or loss.
2.19 Employee benefits
(a)
Defined contribution plan
TheGroup participates in the national pension schemes as defined by the laws of the countries in which
it has operations. In particular, the Singapore companies in theGroupmake contributions to the Central
Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to a defined
contribution pension scheme are recognised as an expense in the period in which the related service is
performed.
(b)
Employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they accrue to the employees.
The estimated liability for leave is recognised for services rendered by employees up to the end of the
reporting period.
2.20 Leases
Thedeterminationofwhetheranarrangement is,or containsa lease isbasedon the substanceof thearrangement
at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or
the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
(a)
As lessee
Finance leases, which transfer to theGroup substantially all the risks and rewards incidental to ownership
of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if
lower, at the present value of theminimum lease payments. Any initial direct costs are also added to the
amount capitalised. Lease payments are apportioned between the finance charges and reduction of the
lease liability soas toachievea constant rate of interest on the remainingbalance of the liability. Finance
charges are charged to theprofit and loss. Contingent rents, if any, are chargedas expenses in theperiod
inwhich they are incurred.
2. Summaryof significant accounting policies (cont’d)
2.20 Leases (cont’d)
(a)
As lessee (cont’d)
Capitalised lease assets are depreciated over the shorter of the estimated useful life of the asset and the
lease term, if there is no reasonable certainty that theGroupwill obtain ownershipby the endof the lease
term.
Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over
lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of
rental expense over the lease term on a straight line basis.
(b)
As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same bases as
rental income. The accounting policy for rental income is set out in Note 2.21(f). Contingent rents are
recognised as revenue in the period inwhich they are earned.
2.21 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to theGroup and the
revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair
value of consideration received or receivable, taking into account contractually defined terms of payment and
excluding taxes or duty. TheGroup assesses its revenue arrangements to determine if it is acting as principal or
agent. TheGroup has concluded that it is actingas aprincipal in all of its revenue arrangements. The following
specific recognition criteriamust also bemet before revenue is recognised:
(a)
Contract revenue
Contract revenue and contract costs are recognised as revenue and expenses respectively by reference
to the stage of completion of the contract activity at the end of each reporting date, when the outcome of
a construction contract can be estimated reliably.When the outcome of a construction contract cannot be
estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to
be recoverable and contract costs are recognisedas expense in the period inwhich they are incurred. An
expected loss on the construction contract is recognised as an expense immediately when it is probable
that total contract costs will exceed total contract revenue.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract
work, claims and incentive payments to the extent that it is probable that they will result in revenue and
they are capable of being reliablymeasured.
for the financial year ended31december 2012
for the financial year ended 31december 2012
notestothe
financialstatements
notestothe
financialstatements
