TANJUNG OFFSHORE BERHAD

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NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2009 3. SIGNIFICANT ACCOUNTING POLICIES (continued) k) Employee Benefi ts i) Short term benefi ts 77 TANJUNG OFFSHORE BERHAD (662315-U) ANNUAL REPORT 2009 Salaries, wages, bonuses, paid annual leave, allowances and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and of the Company. ii) Defi ned contribution plans The Group and the Company makes statutory contributions to the Employee Provident Fund (“EPF”), a defi ned contribution plan. Obligations for contributions to defi ned contribution plan are recognised as an expense in the income statement as incurred. iii) Employee Share Option Scheme For the equity-settled share-based compensation transactions, the fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed on a straightline basis over the vesting period is determined by reference to the fair value of the options granted excluding the effect of non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. At each balance sheet date, the Group revises its estimates of the numbers of options that are expected to become exercisable. It recognised the impact of the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised. l) Financial Instruments i) Cash and cash equivalents Cash and cash equivalents comprise of cash in hand and bank balances, demand deposits and deposits with licensed bank, which are readily convertible to known amounts of cash and subject to insignifi cant risk of change in value. ii) Trade and other receivables Trade and other receivables are carried at anticipated realisable value. Bad debts are written off in the year in which they are identifi ed. An allowance is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date. iii) Financial liabilities Financial liabilities are recognised when the Group and the Company becomes a party to the contractual agreements of the instrument. The particular recognition methods adopted on each of the item in the fi nancial liabilities are set out below: a) Trade and other payables Trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.
TANJUNG OFFSHORE BERHAD (662315-U) ANNUAL REPORT 2009 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2009 3. SIGNIFICANT ACCOUNTING POLICIES (continued) l) Financial Instruments (continued) iii) Financial liabilities (continued) b) Borrowing costs Borrowing costs incurred that are directly attributable to the construction of property, plant and equipment are recognised as part of the cost of those assets during the period of time that is required to complete and prepare the assets for their intended use. All other borrowing costs are recognised as an expense in the year in which they are incurred. c) Serial payment bond The Company issued RM150,000,000 nominal value of up to 8 years serial fi xed rate bonds with up to 18,514,600 detachable warrants in the fi nancial year ended 2006. The Company recognised separately the component of a liability and equity instruments as disclosed in Note 21 to the fi nancial statements. iv) Equity instruments Ordinary shares are classifi ed as equity. Dividend on ordinary shares is recognised in equity in the year in which they are declared. m) Treasury Shares A purchase by the Company of its own equity shares is accounted for under the treasury stock method. Under this method, the shares repurchased and held as treasury shares is measured and carried at the cost of repurchase (including any directly attributable incremental external costs, net of tax) on initial recognition and subsequently. On presentation in the balance sheet, the carrying amount of the treasury shares is offset against equity. Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or the distributable reserves, or both. Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration and the carrying amount of the treasury shares is shown as the movement in equity. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended. n) Revenue Recognition i) Income from contracts/projects Income from contracts/projects of the Group and of the Company is recognised in the income statement on percentage of completion method. ii) Income from chartering and hiring of vessels Income from chartering and hiring of vessels is accrued by reference to the agreement entered into. iii) Income from service charges Income from service charges is recognised on an accrual basis. iv) Income from selling of trading equipment Income from selling of trading equipment is recognised upon delivery of goods and customers’ acceptance. v) Income from interests Income from interests is recognised on an accrual basis. 78
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