TANJUNG OFFSHORE BERHAD

NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2009
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
n) Revenue Recognition (continued)
vi) Dividend income
o) Taxation
Dividend income is recognised when the right to receive payment is established.
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TANJUNG OFFSHORE BERHAD (662315-U)
ANNUAL REPORT 2009
Income tax on the profi t or loss comprises current and deferred tax. Current tax is the expected amount of income taxes
payable in respect of the taxable profi t for the year and is measured using the enacted tax rates relevant to the fi nancial
year.
Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts in the fi nancial statements. In principle, deferred tax liabilities
are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary
differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profi t will be
available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
p) Inventories
Inventories comprising turbine compressor spare parts, work-in-progress and long term contract balances which is stated
at the lower of cost (fi rst-in, fi rst-out basis) and net realisable value.
Cost of turbine compressor spare parts comprises the original cost of purchase plus cost of bringing the inventories to
its location.
Cost of work-in-progress long term contract balances includes direct materials, direct labour and an appropriate portion
of fi xed and variable overheads.
q) Provisions for Liabilities
Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of
past events, it is probable that the Group and the Company will be required to settle the obligation, and a reliable estimate
of the amount can be made. Provisions are measured at the directors’ best estimate of the expenditure required to settle
the obligation at the balance sheet date.
r) Development Costs
Development costs incurred for the development of gas generators are capitalised and are subject to an ongoing
assessments of recoverability based on anticipated future revenues and changes in technologies. The cost that are
capitalised included purchase price, direct labour and related overhead. Development costs initially recognised as an
expense are not recognised as an asset in the subsequent period.
Development costs are set off in accordance to the policy on the government grants. Where the development cost are not
fully recovered from the grant, the excess of the cost are written off immediately to the income statements.
s) Foreign Currency
i) Foreign currency transactions
In preparing the fi nancial statements of the individual entities, transaction in currencies other than the entity’s
functional currency are recorded in the functional currencies using the exchange rates prevailing at the dates of the
transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are
included in the income statement for the period except for exchange differences arising on monetary items that form
part of the Group’s net investment in foreign operation are initially taken directly to the foreign currency translation
reserve within equity until the disposal of the foreign operations, at which time they are recognised in the income
statement.