KING WAN CORPORATION LIMITED ANNuAL REPORT

40Notes to Financial StatementsMarch 31, 2010KING WAN CORPORATION LIMITED2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)Provision for profit sharingThe Group recognises a liability and an expense for profit sharing if the Group has a present legal or constructive obligation topay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.GOVERNMENT GRANTS - Government grants are not recognised until there is reasonable assurance that the Group will complywith the conditions attaching to them and the grants will be received.Government grants are recognised as income over the periods necessary to match them with the costs for which they areintended to compensation, on a systematic basis.REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or receivable. Revenue is reducedfor estimated customer returns, rebates and other similar allowances.Sale of goodsRevenue from the sale of goods is recognised when all the following conditions are satisfied:• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effectivecontrol over the goods sold;• the amount of revenue can be measured reliably;• it is probable that the economic benefits associated with the transaction will flow to the entity; and• the costs incurred or to be incurred in respect of the transaction can be measured reliably.Revenue from construction contracts is recognised in accordance with the Group’s accounting policy on construction contracts(see above).Rendering of servicesRevenue from rendering of services of short-term nature is recognised when the services are completed.Interest incomeInterest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rateapplicable.