NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.23 BORROWING COSTS
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition,
construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the
asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs
are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds.
2.24 TRADE AND OTHER PAYABLES
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs.
After initial recognition, trade and other payables are subsequently measured at amortised cost using the effective
interest method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised, and through the
amortisation process.
2.25 PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of economic resources will be required to settle the obligation and the amount of obligation
can be estimated reliably.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
2.26 EMPLOYEE BENEFITS
(a)
DEFINED CONTRIBUTION PLAN
The Group participates in the national pension schemes as defined by the laws of the countries in which it has
operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund
scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension
schemes are recognised as an expense in the period in which the related service is performed.
(b)
EMPLOYEE LEAVE ENTITLEMENT
Employee entitlements to annual leave are recognised as a liability when they are accrued to the employees. The
estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period.
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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
