Annual Report 2012 - HKExnews

Notes to the Consolidated Financial Statements (Continued)
4 Critical accounting estimates and judgements (Continued)
(c) Revenue recognition
The Group recognises revenue when the significant risks and rewards of ownership of any goods and services have
been transferred, in accordance with the accounting policies for revenue recognition as set out in Note 2.20. The
assessment of when the Group has transferred the significant risks and rewards of ownership to customers and
whether the Group acts as a principal requires the examination of the circumstance of the transaction. The Group’s
advertising clients include advertisers that directly purchase advertisements from the Group and third-party
advertising agencies that are retained by some advertisers to place advertisements on the advertisers’ behalf. As part
of the industry practice, the Group offers agency commissions to these third-party advertising agencies. The agency
commissions in which the advertising agencies are entitled to are based on certain percentage of revenue generated
by the Group. The Group records revenues on a net basis and the associated agency commissions are recorded as a
deduction from the revenue because the advertising agencies are acting on behalf of the advertisers and are also
considered as the Group’s customers.
(d) Provision for impairment of trade and other receivables
Significant judgement is exercised in the assessment of the collectability of trade and other receivables from
customers. In making its judgement, management considers a wide range of factors such as results of follow-up
procedures performed by sales personnel, customers’ payment pattern including subsequent payments and
customers’ financial position. If the financial conditions of the customers are to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be required.
5 Segment Information
The chief operating decision-maker (“CODM”) has been identified collectively as the executive directors of the Company.
The executive directors review the Group’s internal reporting in order to assess performance and allocate resources. The
CODM has determined the operating segments based on these reports.
Management regularly reviews the operating results from geographical perspective. The reportable operating segments
derive their revenue primarily from the advertising. Management assesses the performance of the following segments:
— Hong Kong
— Singapore
Management assesses the performance of the operating segments based on a measure of gross profits.
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FOCUS MEDIA NETWORK LIMITED Annual Report 2012