2. Summary of significant accounting policies (cont’d)
2.22 Leases (cont’d)
(a) As lessee (cont’d)
Operating lease payments are recognised as an expense in profit or loss on a
straight-line basis over the lease term. The aggregate benefit of incentives provided
by the lessor is recognised as a reduction of rental expense over the lease term on
a straight-line basis.
(b) As lessor
Leases where the Group retains substantially all the risks and rewards of the
ownership of the asset are classified as operating leases. Initial direct costs incurred
in negotiating an operating lease are added to the carrying amount of the leased
assets and are recognised over the lease term on the same basis as rental income.
The accounting policy for rental income is set out in Note 2.23(c).
2.23 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will
flow to the Group and the revenue can be reliably measured, regardless of when the
payment is made. Revenue is measured at the fair value of consideration received or
receivable, taking into account contractually defined terms of payment and excluding
taxes or duty. The Group assess its revenue arrangements to determine if it is acting as
principal or agent. The following specific recognition criteria must also be met before
revenue is recognised:
(a) Shipbuilding and Engineering
Revenue from shipbuilding contracts and engineering contracts is recognised by
reference to the percentage of completion at the end of the reporting period. The
percentage of completion is measured by reference to the percentage of total costs
incurred for work performed to date to estimated total costs for the contract. Where
the outcome of a contract cannot be estimated reliably, revenue is recognised only
to the extent of contract costs incurred that are likely to be recoverable.
(b) Shiprepair and conversion
Revenue from fabrication and outfitting works and conversion jobs and shiprepair
contracts are recognised upon completion of work.
(c) Shipchartering and rental
Shipchartering revenue and rental income are recognised on a time proportion basis.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
95
