NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
80
THE STRAITS TRADING COMPANY LIMITED
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.34 CONTINGENCIES
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the control of the Group; or
(b)
a present obligation that arises from past events but is not recognised because:
(i)
It is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or
(ii)
The amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities
assumed in a business combination that are present obligations and which the fair values can be reliably determined.
2.35 SEGMENT REPORTING
For management purposes, the Group is organised into operating segments based on their products and services which
are independently managed by the respective segment chief executives responsible for the performance of the respective
segments under their charge. All operating segments’ operating results are reviewed regularly by the Group Executive
Chairman to make decisions about resources to be allocated to the segment and assess its performance, for which discrete
financial information is available.
3.
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 accounting policies 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.
