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Notes to the
financial statements
For the financial year ended 31 December 2018
91
A N N U A L R E P O R T
2 0 1 8
2.
Summary of significant accounting policies (cont’d)
2.21
Revenue (cont’d)
(a)
Construction contracts
Contract revenue is recognised over time by reference to the Group’s progress towards
completing the performance obligation in the contract. The measure of progress is determined
based on the proportion of contract costs incurred to date to the estimated total contract
costs (input method).
Costs incurred that are not related to the contract or that do not contribute towards
satisfying a performance obligation are excluded from the measure of progress.
For costs incurred in fulfilling the contract which are within the scope of another SFRS(I) (eg.
Inventories), these shall be accounted for in accordance with those other SFRS(I). If these
are not within the scope of another SFRS(I), the Group will recognise these as contract
assets only if (a) these cost relate directly to a contract or an anticipated contract which
the Group can specifically identify; (b) these cost generate or enhance resources of the
Group that will be used in satisfying (or in continuing to satisfy) performance obligations
in the future; and (c) these costs are expected to be recovered. Otherwise, such costs are
recognised as an expense immediately.
Estimates of revenues, costs or extent of progress toward completion are revised if
circumstances change. Any resulting increases or decreases in estimated revenues or costs
are reflected in the profit or loss in the period in which the circumstances that give rise to
the revision become known by management.
The customer is invoiced on a progressive payment schedule. If the value of the goods and
services transferred by the Group exceed the payments, a contract asset is recognised. If
the payments exceed the value of the goods and services transferred, a contract liability
is recognised.
(b)
Sales of goods
Revenue from sales of goods is recognised upon the transfer of significant risk and rewards
of ownership of the goods to the customers, usually on delivery of goods.
Revenue is not recognised to the extent where there are significant uncertainties regarding
recovery of the consideration due, associated costs or the possible return of goods.
(c)
Rendering of services
Revenue from rendering of services is recognised by reference to the stage of completion at
the end of the reporting period. Where the contract outcome cannot be measured reliably,
revenue is recognised to the extent of the expenses recognised that are recoverable.