2011 Annual Report - the solid group inc website

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(f)
Interest income on loans receivables – Revenue is recognized when earned using effective
interest method.
The effective interest method is a method of calculating the amortized 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 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 recognized using the rate of interest
used to discount the future cash flows for the purpose of measuring the impairment
loss.
(g)
(h)
(i)
(j)
Commission income (shown as part of Rendering of Services) – Revenue is recognized on an
accrual basis computed based on a certain percentage of sales.
Increase in cash surrender value of life insurance – Revenue is recognized when the increase in
cash surrender value occurs and becomes determinable.
Service charges and penalties – Revenue is generally recognized on an accrual basis when the
service has been provided and when there is reasonable degree of certainty as to their
collectibility.
Interest income on cash and cash equivalents – Revenue is recognized as the interest accrues
taking into account the effective yield on the asset.
Cost and expenses are recognized in the consolidated statement of income upon
consumption of the goods and/or utilization of the service or at the date they are incurred.
Expenditure for warranties is recognized and charged against the associated provision when
the related revenue is recognized. All finance costs are reported in the consolidated statement
of income, except capitalized borrowing costs which are included as part of the cost of the
related qualifying asset (see Note 2.18), on an accrual basis.
2.14 Leases
The Group accounts for its leases as follows:
(a)
Group as Lessee
Leases which do not transfer to the Group substantially all the risks and benefits of
ownership of the asset are classified as operating leases. Operating lease payments are
recognized as expense in the consolidated statement of income on a straight-line basis
over the lease term. Associated costs, such as maintenance and insurance, are expensed
as incurred.