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BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
BAKER TECHNOLOGY LIMITED ANNUAL REPORT 2012
2. Summaryof significant accounting policies (cont’d)
2.26 Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will
be received and all attaching conditions will be complied with. It shall be recognised in profit or loss on a
systematic basis over the periods in which the entity recognises as expenses the related costs for which the
grants are intended to compensate. Grants related to income may be presented as a credit in profit or loss,
either separately or under a general heading such as “Other income”. Alternatively, they are deducted in
reporting the related expenses.
2.27 Related parties
A related party is defined as follows:
(a) A person or a closemember of that person’s family is related to theGroup andCompany if that person:
(i)
has control or joint control over theCompany;
(ii) has significant influence over theCompany; or
(iii) is a member of the key management personnel of the Group or Company or of a parent of the
Company.
(b) An entity is related to theGroup and theCompany if any of the following conditions applies:
(i)
the entity and the Company are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member.)
(iii) both entities are joint ventures of the same third party
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v)
the entity is a post-employment benefit plan for the benefit of employees of either the Company or
an entity related to theCompany. If theCompany is itself such aplan, the sponsoring employers are
also related to theCompany.
(vi) the entity is controlled or jointly controlled by a person identified in (a).
(vii) a person is identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
3. Significant accounting judgementsand estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could
result in outcomes that require amaterial adjustment to the carrying amount of the asset or liability affected in
the future periods.
3.1 Judgmentsmade in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgments,
apart from those involving estimations, which have themost significant effect on the amounts recognised in the
consolidated financial statements:
(a)
Determination of functional currency
TheGroupmeasures foreign currency transactions in the respective functional currencies of theCompany
and itssubsidiaries. Indetermining the functional currenciesof theentities in theGroup, judgment is required
to determine the currency that mainly influences sales prices for goods and services and of the country
whose competitive forces and regulationsmainlydetermines the sales prices of its goods and services. The
functional currencies of theentities in theGrouparedeterminedbasedonmanagement’s assessment of the
economic environment inwhich the entities operate and the entities’ process of determining sales prices.
(b)
Equity accounting of the share of results of joint venture
During2010, theGroupadopted FRS31 Interests in Joint Ventures toaccount for its15% investment inPPL
Shipyard Pte Ltd (“PPLS”), held by its subsidiary, PPL Holdings Pte Ltd (“PPLH”). Due to themanagement’s
control in PPLSand the existenceof the shareholders’ agreements, theGrouphadaccounted its investment
in PPLS as a joint venture and had equity accounted for its share of results since acquisition inMay 2007
until 26October 2010, when the Group disposed of its investment in PPLH for a gross consideration of
$150,543,750 (US$116,250,000). In 2010, the Group was not able to obtain the financial results of
PPLS for the period from 1 January 2010 to 26 October 2010 (date of disposal). The Group’s share
of PPLS’s results of $15,823,500 recognised in the consolidated statement of comprehensive income for
the financial year ended 31 December 2010was based on the interim dividend received by the Group
in April 2010. This amount was also included in retained earnings as at 31 December 2010 and 31
December 2011 and the opening retained earnings for the current financial year ended 31 December
2012.
In addition, as disclosed in Note 25 to the financial statements, the Group recorded an amount of
$58,237,148 as deferred gain on disposal of the investment in PPLS in its consolidated balance sheets
as at 31December 2011. Themanagement has deferred the recognition of this gain on disposal due to
thependingoutcome of the legal case then. The legal casewas finalisedduring the current financial year
and management has recognised this amount in the Group’s consolidated profit and loss for the current
financial year.
for the financial year ended 31december 2012
for the financial year ended 31december 2012
notestothe
financialstatements
notestothe
financialstatements
