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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.20 Revenue recognition
c) Interest income and expenses
Interest income and expense for all interest-bearing
Revenue comprises the fair value of the consideration
received or receivable for the sale of goods and
services, in the ordinary course of the Group’s
activities. Revenue is shown net of value-added tax,
returns, rebates and discounts and after eliminated
sales within the Group. The Group recognises revenue
when the amount of revenue can be reliably measured
and it is probable that future economic benefits will
flow to the entity and specific criteria have been met
for each of the Group’s activities as described below.
The amount of revenue is not considered to be reliably
measurable until all contingencies relating to the sale
have been resolved. The Group bases its estimates on
historical results, taking into consideration the type of
customer, the type of transaction and the specifics of
each arrangement.
a) Sales of goods
Sales of goods are recognised when a group entity has
delivered products to the customer and the customer
has accepted the products. Revenue is recognised when
it is probable that the economic benefits associated
with the transaction will flow to the group entity and the
group entity has transferred to the buyer the significant
risks and rewards of ownership of the goods.
b) Sales of services
Sales of services are recognised in the accounting
period in which the services are rendered, by reference
to completion of the specific transaction assessed on
the basis of the actual service provided as a proportion
of the total services to be provided.
financial instruments, except for those classified as
held for trading or designated at fair value through
profit or loss, are recognised within ‘interest income’
and “interest expense” in the income statement using
the effective interest method.
The effective interest method is a method of
calculating the amortised cost of a financial asset
or a financial liability and of allocating the interest
income or interest expense over the relevant period.
The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts
through the expected life of the financial instrument
or, when appropriate, a shorter period to the net
carrying amount of the financial asset or financial
liability. When calculating the effective interest
rate, the Group estimates cash flows considering
all contractual terms of the financial instrument (for
example, prepayment options) but does not consider
future credit losses. The calculation includes all
fees and points paid or received between parties
to the contract that are an integral part of the
effective interest rate, transaction costs and all other
premiums or discounts.
Once a financial asset or a group of similar financial
assets has been written down as a result of an
impairment loss, interest income is recognised using
the rate of interest used to discount the future cash
flows for the purpose of measuring the impairment loss.
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