NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
a)
Basis of preparation (cont’d)
New and revised standards, amendments to standards and interpretations that have been issued at the
reporting date but are not yet effective for the financial year ended 30 June 2016 have not been applied
in preparing these financial statements. None of these are expected to have a significant effect on the
financial statements of the Group and the Company except for the adoption of the following new FRS
which are relevant to the Group:
FRS 115 Revenue from Contracts with Customers
FRS 115 replaces FRS 18 ‘Revenue’, FRS 11 ‘Construction contracts’ and other revenue-related
interpretations. It applies to all contracts with customers, except for leases, financial instruments and
insurance contracts and certain guarantee contracts and non-monetary exchange contracts. FRS 115
provides a single, principle-based model to be applied to all contracts with customers. It provides
guidance on whether revenue should be recognised at a point in time or over time, replacing the
previous distinction between goods and services. The standard introduces new guidance on specific
circumstances where cost should be capitalised and new requirements for disclosure of revenue in the
financial statements. The standard is effective for annual periods beginning on or after 1 January 2018.
The Group will reassess its contracts with customers in accordance with FRS 115.
FRS 109 Financial Instruments
FRS 109 includes guidance on (i) the classification and measurement of financial assets and financial
liabilities; (ii) impairment requirements for financial assets; and (iii) general hedge accounting. FRS 109,
when effective will replace FRS 39 Financial Instruments: Recognition and Measurement. This standard is
effective for annual periods beginning on or after 1 January 2018. The Group will reassess the potential
impact of FRS 109 and plans to adopt the standard on the required effective date.
FRS 116 Leases
FRS 116 replaces the existing FRS 17: Leases. It reforms lessee accounting by introducing a single lessee
accounting model. Lessees are required to recognise all leases on their balance sheets to reflect their
rights to use leased assets (a “right-of-use” asset) and the associated obligations for lease payments (a
lease liability), with limited exemptions for short term leases (less than 12 months) and leases of low value
items.
The lease liability is initially measured as the present value of future lease payments (include fixed, non-
cancellable payments for lease elements and certain types of contingent payments etc), with adjustments
for any prepaid rents, lease incentives received and initial direct costs incurred. In subsequent periods,
the lease liability is accounted for similarly to a financial liability using the effective interest method. The
right-of-use asset is accounted for similarly to a purchased asset and depreciated or amortised.
The standard is effective for annual periods beginning on or after 1 January 2019. The Group will assess
the potential impact of FRS 116 and plans to adopt the standard on the required effective date.
66
ISOTEAM LTD.
ANNUAL REPORT 2016
