SEO Version
NOTES TO THE FINANCIAL STATEMENTS
For the Ànancial year ended 31 December 2013
91
Annual Report 2013
F i nanc i a l Statement s
2.
Significant accounting policies
(continued)
2.5
Intangible assets (continued)
Goodwill on acquisitions
(continued)
Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated
impairment losses.
Goodwill on associated companies is included in the carrying amount of the investments.
Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount of goodwill
relating to the entity sold, except for goodwill arising from acquisitions prior to 1 January 2001. Such goodwill
was adjusted against retained profits in the year of acquisition and is not recognised in the income statement on
disposal.
2.6
Borrowing costs
Borrowing costs are recognised in the income statement using the effective interest method except for those costs
that are directly attributable to borrowings acquired specifically for the construction of motor vessels, docks and
quays. The actual borrowing costs incurred during the construction period less any investment income on temporary
investments of these borrowings, are capitalised in the cost of the docks and quays.
2.7
Construction contracts
A construction contract is a contract specifically negotiated for the construction of an asset or a combination of
assets that are closely interrelated or interdependent in terms of their design, technology and functions or their
ultimate purpose or use.
Contract costs are recognised when incurred.
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are
recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at
the balance sheet date (“percentage-of-completion method”). When the outcome of a construction contract cannot
be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be
recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is
recognised as an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract
work and claims that can be measured reliably. A variation or a claim is recognised as contract revenue when it is
probable that the customer will approve the variation or negotiations have reached an advanced stage such that it is
probable that the customer will accept the claim.
The stage of completion is measured by reference to the completion of a physical proportion of the contract work.
Costs incurred during the financial year in connection with future activity on a contract are excluded from costs
incurred to date when determining the stage of completion of a contract. Such costs are shown as “construction
contract work-in-progress” on the balance sheet unless it is not probable that such contract costs are recoverable
from the customers, in which case, such costs are recognised as an expense immediately.
At the balance sheet date, the cumulative costs incurred plus recognised profits (less recognised losses) on each
contract is compared against the progress billings. Where the cumulative costs incurred plus the recognised profits
(less recognised losses) exceed progress billings, the balance is presented as due from customers on construction
contracts within “trade and other receivables”. Where progress billings exceed cumulative costs incurred plus
recognised profits (less recognised losses), the balance is presented as due to customers on construction contracts
within “trade and other payables”.
Progress billings not yet paid by customers and retentions by customers are included within “trade and other
receivables”. Advances received are included within “trade and other payables”.
Powered by FlippingBook Publisher