Annual Report 2011 - Goodbaby International Holdings Limited

NOTES TO FINANCIAL STATEMENTS
31 December 2011
3.2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Contracts for services
Contract revenue on the rendering of services comprises the agreed contract amount. Costs of
rendering services comprise labour and other costs of personnel directly engaged in providing the
services and attributable overheads.
Revenue from the rendering of services is recognised based on the percentage of completion of
the transaction, provided that the revenue, the costs incurred and the estimated costs to
completion can be measured reliably. The percentage of completion is established by reference to
the costs incurred to date as compared to the total costs to be incurred under the transaction.
Where the outcome of a contract cannot be measured reliably, revenue is recognised only to the
extent that the expenses incurred are eligible to be recovered.
Provision is made for foreseeable losses as soon as they are anticipated by management.
Where contract costs incurred to date plus recognised profits less recognised losses exceed
progress billings, the surplus is treated as an amount due from contract customers. Where
progress billings exceed contract costs incurred to date plus recognised profits less recognised
losses, the surplus is treated as an amount due to contract customers.
Retirement benefits
Pursuant to the relevant regulations, the Group’s subsidiaries which operate in Mainland China
participate in a local municipal government retirement benefit scheme (the “Scheme”), whereby
the Group is required to contribute a certain percentage of the basic salaries of its employees to
the Scheme to fund the retirement benefits. The local municipal government undertakes to assume
the retirement benefit obligations of all existing and future retired employees of the Group. The
only obligation of the Group with respect to the Scheme is to pay the ongoing required
contributions under the Scheme mentioned above. Contributions under the Scheme are charged to
the statement of comprehensive income as incurred. There are no provisions under the Scheme
whereby forfeited contributions may be used to reduce future contributions.
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