Page 60 - cosmosteel

ACHIEVING THE RIGHT BALANCE COSMOSTEEL ANNUAL REPORT 2013 58
notes to
the f inanc i al statements ( cont ’d)
30 September 2013
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Basis of Presentation (Cont’d)
The company's financial statements have been prepared on the same basis, and as permitted
by the Companies Act, Chapter 50, no statement of profit or loss and other comprehensive
income is presented for the company.
Basis of Preparation of the Financial Statements
The preparation of financial statements in conformity with generally accepted accounting
principles requires the management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting year. Actual results could differ from those estimates. The estimates
and assumptions are reviewed on an ongoing basis. Apart from those involving estimations,
management has made judgements in the process of applying the entity’s accounting policies.
The areas requiring management’s most difficult, subjective or complex judgements, or areas
where assumptions and estimates are significant to the financial statements, are disclosed
at the end of this footnote, where applicable.
Revenue Recognition
The revenue amount is the fair value of the consideration received or receivable from the
gross inflow of economic benefits during the reporting year arising from the course of the
activities of the entity and it is shown net of any related sales taxes, estimated returns and
rebates. Revenue from the sale of goods is recognised when significant risks and rewards of
ownership are transferred to the buyer, there is neither continuing managerial involvement
to the degree usually associated with ownership nor effective control over the goods sold, and
the amount of revenue and the costs incurred or to be incurred in respect of the transaction
can be measured reliably. Revenue from rendering of services that are of short duration is
recognised when the services are completed. Interest is recognised using the effective interest
method. Dividend from equity instruments is recognised as income when the entity’s right
to receive payment is established.
Employee Benefits
Contributions to defined contribution retirement benefit plans are recorded as an expense as
they fall due. The entity's legal or constructive obligation is limited to the amount that it agrees
to contribute to an independently administered fund which is the Central Provident Fund in
Singapore (a government managed retirement benefit plan). For employee leave entitlement
the expected cost of short-term employee benefits in the form of compensated absences is
recognised in the case of accumulating compensated absences, when the employees render
service that increases their entitlement to future compensated absences; and in the case of
non-accumulating compensated absences, when the absences occur. A liability for bonuses is
recognised where the entity is contractually obliged or where there is constructive obligation
based on past practice.