TAN CHONG MOTOR HOLDINGS BERHAD
Annual Report 2014
67
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(m) Provisions
A provision is recognised if, as a result of a past event, the Group or the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required
to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as finance cost.
Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based
on historical warranty data and a weighting of all possible outcomes against their associated probabilities.
(n) Revenue and other income
(i)
Goods sold
Revenue from sale of goods in the course of ordinary activities is measured at fair value of the consideration
received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is
recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that
the significant risks and rewards of ownership have been transferred to the customer, recovery of the
consideration is probable, the associated costs and possible return of goods can be estimated reliably, there
is no continuing management involvement with the goods, and the amount of revenue can be measured
reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the
discount is recognised as a reduction of the revenue as the sales are recognised.
(ii) Services
Revenue from services rendered is recognised in profit or loss as and when the services are performed.
(iii) Hire purchase revenue
Hire purchase revenue is recognised in the profit or loss based on a pattern reflecting a constant periodic
rate of return on the net investment outstanding at the end of each reporting period.
(iv) Dividend income
Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive
payment is established.
(v) Commissions
When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue
recognised is the net amount of commission made by the Group.
(vi) Rental income
Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the total rental income, over the term of lease. Rental
income from sub-leased property is recognised as other income.
(vii) Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss except for
interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining
a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.
