NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.26 EMPLOYEE BENEFITS (CONT’D)
(c)
SEVERANCE BENEFITS
Certain subsidiaries operate a partly funded or unfunded, Severance Benefits Scheme (”the Scheme”) for their eligible
employees. The subsidiaries’ obligation under the Scheme, calculated using the Projected Unit Credit Method, is
determined based on actuarial computations by independent actuaries, through which the amount of benefits
that employees have earned in return for their service in the current and prior years is estimated. That benefit is
discounted in order to determine its present value.
Re-measurements of the net defined benefit liability, comprise actuarial gains and losses, any change in the effect
of the plan asset ceiling, excluding net interest on the net defined benefit liability and the return on plan assets
excluding net interest on the net defined benefit liability, are recognised immediately in the balance sheet with
a corresponding debit or credit to retained earnings through other comprehensive income in which they occur.
Re-measurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in
profit or loss when plan amendment or curtailment occurs.
The amount recognised in the balance sheet is the aggregate of the present value of the defined benefit obligation
less the fair value of any plan asset at the reporting date. Any asset resulting from this calculation is limited to the
present value of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan.
(d)
TERMINATION BENEFITS
Termination benefits are payable when employment is terminated before the normal retirement date or whenever an
employee accepts voluntary redundancy in exchange for these benefits. Termination benefits are recognised when
it is demonstrably committed to either terminate the employment of current employees according to a detailed
plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage
voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of
termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more
than 12 months after the reporting date are discounted to present value.
2.27 LEASES
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at
inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement
conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered
into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional
requirements of INT FRS 104.
(a)
WHERE THE GROUP IS THE LESSEE
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item
are classified as operating leases. Operating lease payments (net of any incentives received from the lessor) are
recognised as an expense in profit or loss on a straight-line basis over the lease term. Contingent rents are recognised
as expenses in profit or loss in the periods in which they are incurred.
76
THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
