NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
86
COSCO Corporation (Singapore) Limited
2.
Significant accounting policies
(continued)
2.2
Revenue recognition (continued)
The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it
is probable that the collectability of the related receivables is reasonably assured and when the specific
criteria for each of the Group’s activities are met as follows:
(a)
Rendering of services
(i)
Ship repair, ship building and marine engineering
Revenue from ship repair, ship building, marine engineering, container repairs and services,
fabrication work services and production of marine outfitting components is recognised on
the percentage-of-completion method based on progress of the contract work, where the
outcome of the contract can be estimated reliably. If the contract covers a number of projects
and the cost and revenue of such individual projects can be identified within the terms of the
overall contract, each such project is treated as a separate contract. Provision is made in
full where applicable for expected losses on contracts in progress. Please refer to Note 2.7
“Construction contracts” for the accounting policy on revenue from construction contracts for
ship building and marine engineering.
(ii)
Shipping
Revenue from time charter is recognised on the straight-line basis over the period of the time
charter agreement.
Revenue from voyage charter is recognised rateably over the estimated length of the voyage
within the reporting period and ends in the subsequent reporting period.
The Group determines the percentage of completion of voyage freight using the discharge-to-
discharge method. Under this method, voyage revenue is recognised rateably over the period
from the departure of a vessel from its original discharge port to departure from the next
discharge port.
Demurrage is included if a claim is considered probable. Losses arising from time or voyage
charters are provided for as soon as they are anticipated.
(b)
Rental income
Rental income from operating leases is recognised on the straight-line basis over the lease term.
(c)
Sale of scrap materials
Income from sale of scrap materials is recognised when the items have been delivered to the
customer, the customer has accepted the products and collectibility of the related receivables is
reasonably assured.
(d)
Interest income
Interest income is recognised using the effective interest method.
(e)
Dividend income
Dividend income is recognised when the right to receive payment is established.
