NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.28 INCOME RECOGNITION (CONT’D)
Revenue from sale of properties in the course of development
Where property is under development and agreement has been reached to sell such property when construction is
complete, the Directors consider whether the contract comprises:
– A contract to construct a property; or
– A contract for sale of a completed property.
(a)
Where a contract is judged to be for construction of a property, revenue is recognised using the percentage of
completion method as construction progresses.
(b)
Where the contract is judged to be for the sale of completed property, revenue is recognised when the significant
risks and rewards of ownership of the real estate have been transferred to the buyer (i.e. revenue is recognised
using the completed contract method).
i)
If, however, the legal terms of the contract are such that the construction represents the continuous transfer
of work in progress to the purchaser, the percentage of completion method of revenue recognition is applied
and revenue is recognised as work progresses.
ii)
In Singapore context, INT FRS 115 includes an accompanying note on application of INT FRS 115 in Singapore
which requires the percentage of completion method of revenue recognition to be applied to sale of
private residential properties in Singapore prior to completion of the properties that are regulated under the
Singapore Housing Developers (Control and Licensing) Act (Chapter 130) and uses the standard form of sale
and purchase agreements (“SPAs”) prescribed in the Housing Developers Rules. The accompanying note
to INT FRS 115 does not address the accounting treatment for other SPAs, including SPAs with a Deferred
Payment Scheme feature in Singapore.
In the above situations (i) and (ii), the percentage of work completed is measured based on the costs incurred up
until the end of the reporting period as a proportion of total costs expected to be incurred.
2.29 TAXES
(a)
CURRENT INCOME TAX
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the
Group operates and generates taxable income.
Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates
positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
