TPSEAL 2010 Financial Results. - Serena Hotels

Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
(e)
Revenue recognition (continued)
Revenue is recognised as follows:
(i)
(ii)
(iii)
(iv)
Sales of goods are recognised in the period in which the Group has delivered products to the customer, and there is
no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery does not occur until the
products have been accepted by the customer.
Sales of services are recognised in the 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 percentage of the total services to be
provided.
Interest income is recognised using the effective interest method.
Dividends are recognised as income in the period in which the right to receive payment is established.
Changes in accounting policy
The Group has changed its accounting policy for dividends paid out of pre-acquisition profits from 1 July 2009 when the revised
IAS 27, ‘Consolidated and separate financial statements’, became effective. Previously, dividends paid out of pre-acquisition
profits were deducted from the cost of the investment. The new accounting policy is applied prospectively in accordance with
the transition provisions. It was therefore not necessary to make any adjustments to any of the amounts previously recognised
in the financial statements.
(f)
Property, plant and equipment
All categories of property, plant and equipment are initially recorded at cost. Buildings are subsequently shown at fair value,
based on periodic, but at least every five year, valuations by external independent valuers, less subsequent depreciation for
buildings. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged
to profit or loss during the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation are credited to a revaluation surplus reserve in equity. Decreases that
offset previous increases of the same asset are charged against the revaluation surplus; all other decreases are charged to profit
or loss. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation
charged to profit or loss) and depreciation based on the asset’s original cost is transferred from the revaluation surplus to
retained earnings.
Depreciation on assets is calculated using the straight line method to write down their cost or revalued amounts to their
residual values over their estimated useful lives, as follows:
Land and buildings
Computers
Motor vehicles
Furniture and fittings
Lift installations
Laundry equipment
Over the period of the lease
3 - 4 years
4 years
8 years
10 years
10 years
50 TPS EASTERN AFRICA LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2010