NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
n)
Merger reserve
Entities under common control acquired during the restructuring exercise in 2013 are accounted for
by applying the pooling of interest method. Merger reserve represents the difference between the
consideration paid by the Company and the share capital of the subsidiaries acquired under common
control, following the application of pooling of interest method. This reserve will remain until the
subsidiaries are disposed.
o)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits associated with the
transaction will flow to the Group, and the amount of revenue and related cost can be reliably measured.
Revenue from construction contract is recognised by reference to the stage of completion of the contract
activity at the reporting date (the percentage of completion method) as set out in note 2(g).
Service income is recognised upon the performance of the services.
Revenue from sale of goods is recognised when the Company has delivered the products to the customer
and significant risks and rewards of ownership of the goods have been passed to the customer.
Interest income is recognised on a time proportion basis using the effective interest method.
Dividend income is recognised when the rights to receive the payment is established.
Rental income from operating leases is recognised on a straight-line basis over the lease term.
p)
Government grants
Government grants are recognised at their fair value when there is reasonable assurance that the grant
will be received and all attaching conditions will be complied with. Where the grant relates to an asset, the
fair value is recognised as deferred capital grant on the statement of financial position and is amortised to
profit or loss over the expected useful life of the relevant asset by equal annual instalments.
When the grant relates to an expense item, it is recognised in profit or loss over the period necessary to
match them on a systematic basis to the costs that it is intended to compensate.
q)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials
and, where applicable, direct labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Cost is determined using a first-in first-out basis. Net
realisable value represents the estimated selling price in the ordinary course of business, less the costs of
completion and selling expenses.
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ISOTEAM LTD.
ANNUAL REPORT 2016
