Annual Report 2011 - Colombo Stock Exchange

26 Annual Report 2011Notes to the Financial StatementsYear ended 31 st December 20112. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)2.3. Liabilities & Provisions2.3.1. Trade & Other PayablesTrade and other payables are stated at their cost.2.3.2. Retirement Benefit Costsa) Defined Benefit Plan – Retirement GratuityFull provision has been made on account of retiring gratuity from the first year of service of theemployee in conformity with the Sri Lanka Accounting Standard No. 16 “Retirement BenefitCosts” at half (1/2) month’s salary of each year of service.However, according to the payment of Gratuity Act No. 12 of 1983, the liability for gratuity foran employee arises only on completion of five years of continued service.The liability is not externally funded nor is it actuarially valued. This item is grouped under Non-Current Liabilities in the Balance Sheet.b) Defined Contribution Plans – Employees’ Provident Fund & Employees’ Trust FundAll employees who are eligible for Employees’ Provident Fund Contribution and Employees’Trust Fund Contributions are covered by relevant contribution funds in line with respectivestatues and regulations.2.3.3. ProvisionsProvisions are made for all obligations existing as at the Balance Sheet date when it is probable thatsuch an obligation will result in an outflow of resources and a reliable estimate can be made of thequantum of the outflow.2.4. Capital Commitments and ContingenciesAll material capital commitments and contingent liabilities of the company are disclosed in the respectivenotes to the Financial Statements.2.5. Grants & SubsidiesGrants and subsidies related to assets, including non-monetary grants at fair value are deducted at arriving atthe carrying value of the asset.2.6. Income Statement2.6.1. TurnoverTurnover represents the amounts derived from the provision of goods and services which fall withinthe Company’s ordinary activities net of trade discounts and turnover related taxes and service charge.2.6.2. Revenue and Expenses2.6.2.1. Revenue RecognitionRevenue is recognized to the extent that it is probable that the economic benefits will flowto the Company and the revenue and associated costs incurred or to be incurred can bereliably measured. Revenue is measured at the fair value of the consideration received orreceivable net of trade discounts and sale taxes. The following specific criteria are used forthe purpose of recognition of revenue.a) Income from HotelApartment revenue is recognized on the rooms occupied on a daily basis and foodand beverage and other hotel related sales are accounted for at the time of sale.b) Interest IncomeInterest income is recognized as the interest accrues (taking into account theeffective yield on the asset) unless collectibles are in doubt.