A N N U A L R E P O R T 2 0 0 1 - IGB Corporation Berhad

NOTES TO THE FINANCIAL STATEMENTSfor the financial year ended 31 December 2001(j)Construction contractsWhen the outcome of a construction contract can be reliably estimated, contract revenue and contractcosts are recognised over the period of the contract as revenue and expenses respectively. The Groupuses the percentage of completion method to determine the appropriate amount of revenue and coststo recognise in a given period; the stage of completion is measured by reference to the proportion thatcontract costs incurred for work performed to date bear to the estimated total costs for the contract.When the outcome of a construction contract cannot be estimated reliably, contract revenue isrecognised only to the extent of contract costs incurred that is probable will be recoverable; contractcosts are recognised when incurred.When it is probable that contract costs will exceed total contract revenue, the expected loss is recognisedas an expense immediately.The aggregate of the costs incurred and the profit/loss recognised on each contract is compared againstthe progress billings up to the period end. Where costs incurred and recognised profits (less recognisedlosses) exceed progress billings, the balance is shown as amounts due from customers on constructioncontracts under receivables, deposits and prepayments. Where progress billings exceed costs incurredplus recognised profits (less recognised losses), the balance is shown as amounts due to customers onconstruction contracts under payables.(k)Revenue recognitionIncome from property development is recognised on the percentage of completion method based onunits sold, and where the outcome of the development projects can be reliably estimated. Anticipatedlosses are provided for in full.Income from construction contracts (including joint venture projects) is recognised on the percentage ofcompletion method in cases where the outcome of the contract can be reliably estimated. In all cases,anticipated losses are provided for in full.Dividend income from investments is taken up as income when the shareholders’ right to receivepayment is established.Hotel revenue is recognised upon delivery of products and customer acceptance, and performance ofservices, net of sales taxes and discounts.Management fees, project management fees and rental income are recognised on accrual basis.Interest income is recognised on accrual basis unless collectibility is in doubt in which case the recognitionof such income is suspended.IGB Annual Report 200177