FRONTLINE COVER FA 070606 CR2.indd

frontline technologies corporation ltd
annual report 2006 59
> notes to the financial statement
for the year ended 31 march 2006
2. Significant accounting policies (cont’d)
(p) Employee benefits (cont’d)
(i) Equity compensation benefits (cont’d)
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any modification, which increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as
measured at the date of modification.
(ii)
(iii)
(iv)
(v)
Defined contribution plans
As required by law, the Group makes contribution to the state pension scheme, the Central Provident
Fund (“CPF”) for Singapore companies, the Employees Provident Fund (“EPF”) for Malaysia companies
and Provident fund for India companies. CPF, EPF and Provident fund contributions are recognised
as compensation expense in the same period as the employment that gives rise to the contributions.
Eligible employees and the Group make monthly contributions based on a percentage of the
employee’s basic salary.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for estimated liability for annual leave as a result of services rendered by employees up to the
balance sheet date.
Gratuity fund for a subsidiary
In India, the liability for gratuity is determined actuarially by the Life Insurance Corporation of India (“LIC”).
The subsidiary makes periodic contributions for all eligible employees, to a gratuity fund maintained and
administered by the LIC.
Superannuation fund for a subsidiary
In India, a subsidiary makes periodic contributions to a superannuation fund maintained and administered
jointly by the LIC and the trust formed by the subsidiary for this purpose, based on a specific percentage of
the salary of the eligible employees.
(q)
Leases
(i) Operating leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased
assets are classified as operating leases. Operating lease payments are recognised as an expense in the profit
and loss account on a straight-line basis over the lease term.
(ii)
Hire purchase
Where assets are financed by hire purchase contracts that give rights approximating to ownership, the
assets are capitalised as if they had been purchased outright at the values equivalent to the present value
of the total rental payable during the periods of the hire purchase and the corresponding hire purchase
commitments are included under liabilities. The excess of the hire purchase payments over the recorded hire
purchase obligations is treated as finance charges which are allocated over each hire purchase term to give a
constant rate of interest on the outstanding balance at the end of each period.