NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.3 FUTURE CHANGES IN FINANCIAL REPORTING STANDARDS (CONT’D)
FRS 115 Revenue from Contracts with Customers
FRS 115 establishes a new five-step models that will apply to revenue arising from contracts with customers. FRS 115 will
supersede the current revenue recognition guidance including FRS 18 Revenue, FRS 11 Construction Contracts and the
related interpretations when it becomes effective.
The core principle of FRS 115 is that an entity should recognise revenue which depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services.
Under FRS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the
goods or services underlying the particular performance obligation is transferred to the customer.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017. The
Group is in the process of reviewing the implications of this standard.
FRS 109 Financial Instruments
The standard introduces new requirements for classification and measurement, impairment and hedge accounting.
FRS 109 is effective for annual periods beginning on or after 1 January 2018. Retrospective application is required, but
comparative information is not compulsory. The Group is in the process of reviewing the implications of this standard.
The improvements to FRSs issued in January 2014, February 2014 and November 2014 include a number of amendments
to various FRSs. The Group is in the process of reviewing the implications of these improvements.
2.4 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in
the future periods.
Judgements made by management in the application of FRS that have a significant effect on the financial statements
and in arriving at estimates with a significant risk of material adjustment in the following year are discussed in note 42.
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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
