Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.24 Revenue recognitionRevenue is recognised to the extent that probable the economic benefi ts will fl ow to the Group and the revenue can bereliably measured.a) Sale of goodsRevenue is recognised upon the transfer of signifi cant risk and rewards of ownership of the goods to the customer,which generally coincides with delivery and acceptance of the goods sold. Revenue is not recognised to the extentwhere there are signifi cant uncertainties regarding recovery of the consideration due, associated costs or the possiblereturn of goods.b) Franchise feesFranchise fees are recognised upon the execution of the Master Franchise Agreements.c) Royalty incomeRoyalty income is recognised upon the sale of goods by franchise outlets and the amount is determined based on acertain percentage of net sales in accordance with the terms of the Master Franchise Agreements.d) Interest incomeInterest income is recognised as interest accrues (using the effective interest method) unless collectibility is indoubt.e) Dividend incomeDividend income is recognised when the Group’s right to receive payment is established.2.25 Income taxesa) Current taxCurrent tax assets and liabilities for the current and prior periods are measured at the amount expected to berecovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are thosethat are enacted or substantively enacted by the balance sheet date.Notes to the Financial Statements 102Annual Report 2006