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NOTES TO THE FINANCIAL STATEMENTS
For the Ànancial year ended 31 December 2013
98
COSCO Corporation (Singapore) Limited
F i nanc i a l Statement s
2. Significant accounting policies (continued)
2.17 Leases (continued)
(a) When the Group is the lessee: (continued)
(ii) Lessee - Operating leases
Leases of property, plant and equipment where substantially all risks and rewards incidental to
ownership are retained by the lessors are classified as operating leases. Payments made under
operating leases (net of any incentives received from the lessors) are recognised in the income
statement on a straight-line basis over the lease term.
Contingent rents are recognised as an expense in the income statement when incurred.
(b) When the Group is the lessor:
The Group leases certain items of property, plant and equipment and investment properties to non-related
parties and related parties.
(i) Lessor - Operating leases
Leases of property, plant and equipment and investment properties where the Group retains
substantially all risks and rewards incidental to ownership are classified as operating leases. Rental
income from operating leases (net of any incentives given to lessees) is recognised in the income
statement on the straight-line basis over the lease term.
Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to
the carrying amount of the leased asset and recognised as an expense in the income statement over
the lease term on the same basis as the lease income.
Contingent rents are recognised as income in the income statement when earned.
2.18 Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is determined using the weighted average
method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct
costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and applicable variable selling expenses.
2.19 Income taxes
Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered
from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the
balance sheet date.
Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements except when the deferred income tax arises from the initial
recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither
accounting nor taxable profit or loss at the time of the transaction.
A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and
associated companies, except where the Group is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.