Annual Report 2012 - IOI Group

NOTES TO THEFINANCIAL STATEMENTS5. SIGNIFICANT ACCOUNTING POLICIES (Continued)5.16 ProvisionsProvisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliableestimate can be made of the amount of the obligation.Where the effect of the time value of money is material, the amount of a provision will be discounted to its present valueat a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.Provisions are reviewed at the end of each reporting period and adjusted to reflect current best estimates. If it is no longerprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisionwill be reversed.Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligationunder the contract shall be recognised and measured as a provision.5.17 Contingent Liabilities and Contingent AssetsA contingent liability is a possible obligation that arises from past events whose existence will be confirmed by theoccurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a presentobligation that is not recognised because it is not probable that an outflow of resources will be required to settle theobligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognisedbecause it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in thefinancial statements.A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence ornon-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognisecontingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measuredinitially at their fair value at the acquisition date, irrespective of the extent of any non-controlling interest.5.18 Revenue RecognitionRevenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable thatthe economic benefits associated with the transaction will flow to the entities and the amount of the revenue can bemeasured reliably.5.18.1 Commodities, other products and servicesRevenue is recognised upon delivery of products and customer acceptance, if any, or performance of services, netof sales taxes and discounts.148IOI CORPORATION BERHADAnnual Report 2012