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COSCO Corporation (Singapore) Limited
Annual Report 2015
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
Financial Statements
2.
Significant accounting policies
(continued)
2.2 Revenue recognition
Sales comprise the fair value of the consideration received or receivable for the sale of goods and
rendering of services in the ordinary course of the Group’s activities. Sales are presented, net of value-
added tax, rebates and discounts, and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue and related cost can be reliably measured,
when 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 a 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 a straight-line basis over the lease term.
(c)
Sale of scrap materials
Income from sale of scrap materials is recognised when the products have been delivered to the
customer, the customer has accepted the products and collectibility of the related receivables is
reasonably assured.
