Annual Report 2011 - Food Junction

Notes to the Financial Statements (cont’d)
31 December 2011
2. Summary of significant accounting policies (cont’d)
2.19 Operating lease
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not
explicitly specified in an arrangement.
For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1
January 2005 in accordance with the transitional requirements of INT FRS 104.
(a) As lessee
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis
over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as
a reduction of rental expense over the lease term on a straight-line basis.
(b) As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset
are classified as operating leases. Initial direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset and recognised over the lease term on the
same bases as rental income (Note 2.20). Contingent rents are recognised as revenue in the
period in which they are earned.
2.20 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue
is measured at the fair value of consideration received or receivable, taking into account contractually
defined terms of payments and excluding taxes or duty.
The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The
Group has concluded that it is acting as a principal in all of its revenue arrangements. The following
specific recognition criteria must also be met before revenue is recognised.
Revenue from operation of food courts is recognised when fees are charged to the food court tenants
based on a percentage of their gross sales.
Revenue from sale of food and beverage is recognised upon delivery and acceptance by customers, net
of sales discounts.
2.21 Taxes
Dividend income is recognised when the Group’s right to receive payment is established.
Management fee is recognised upon rendering of services.
Interest income is recognised using the effective interest method.
(a) Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted or substantively enacted at the
end of the reporting period, in the countries where the Group operates and generates taxable
income.
Current income taxes are recognised in profit or loss. Management periodically evaluates
positions taken in the tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions where appropriate.
Annual Report 65