. 9 6
NOTESTOTHE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
BAKER
TECHNOLOGY
L IMI TED
THE BE ST
I N US
2.
SUMMARYOF SIGNIFICANTACCOUNTINGPOLICIES (CONT’D)
2.14
Financial guarantee
A financial guaranteecontract isacontract that requires the issuer tomake specifiedpayments to reimburse
theholder for a loss it incursbecausea specifieddebtor fails tomakepaymentwhendue inaccordancewith
the terms of adebt instrument.
Financial guarantees are recognised initially at fair value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are
recognised as income in the profit or loss over the periodof 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
amountwith thedifferencecharged to theprofit or loss.
2.15
Employeebenefits
(a)
Definedcontributionplan
The Group 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 the Group make contributions
to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme.
Contributions to adefinedcontributionpension scheme are recognised as anexpense in theperiod
inwhich the related service is performed.
(b)
Employee leaveentitlement
Employee entitlements to annual leave are recognised as a liability when they are accrued to the
employees. The estimated liability for leave is recognised for services rendered by employees up to
theendof the reportingperiod.
2.16
Leases
As lessee
Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over
lease term. The aggregatebenefit of incentives providedby the lessor is recognised as a reductionof rental
expenseover the lease termon a straight-linebasis.
