FEDERAL INTERNATIONAL (2000) LTD

Notes to the Financial Statements2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(r) Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to theGroup and the revenue can be reliably measured. The following specific recognition criteria must alsobe met before revenue is recognised:Federal International (2000) Ltd AR 2002and its Subsidiary Companies49i) Revenue from the sale of goods is recognised upon the passage of title to the customer, whichgenerally coincides with their delivery and acceptance.ii)Revenues from the provision of service and maintenance, technical and consultancy and designand engineering services are recognised upon performance of the services to the customer.iii)iv)(v)Rental income from rental of leasehold building space is recognised based on the period of rentalduring the financial year.Revenue from royalties is recognised upon external sales made by the Group’s strategic alliancepartners.Revenue from commissions is recognised upon external sales made by the Group’s agencyprincipals.(vi) Dividend income is recognised in the profit and loss account of the Company as and whendeclared by subsidiary companies up to the end of the financial year. Dividend income fromunquoted investments is recognised upon receipt.(vii) Interest income is recognised as the interest accrues on a day-to-day basis, unless collectibility isin doubt.(s)Borrowing costsBorrowing costs are recognised as expenses in the period in which they are incurred.(t)Foreign currency transactionsForeign currency transactions are recorded by applying to the foreign currency amount the exchangerate at the date of transaction.At each balance sheet date, foreign currency monetary items are reported using the rate on that dateand non-monetary items are carried and reported using the exchange rate at the date of transaction.Exchange differences arising on the settlement of monetary items or on reporting monetary items atrates different from those at which they were initially recorded during the period or reported in theprevious financial statements are recognised as income or expenses in the year in which they arise.For inclusion in the consolidated financial statements, all assets and liabilities of foreign subsidiarycompanies are translated into Singapore dollars at the exchange rates ruling at the balance sheetdate and the results of foreign subsidiary companies are translated into Singapore dollars at theweighted average exchange rates. Exchange differences due to such currency translations are includedin the foreign currency translation reserve.