notes to the financial statements - Singapore Technologies ...

More documents

Recommendations

Info

136 SIMPLY SMARTERNOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(u)Significant accounting estimates and judgements (continued)(i)Key sources of estimation uncertainty (continued)Impairment of loans and receivablesThe Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. To determinewhether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significantfinancial difficulties of the debtor and default or significant delay in payments.Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical lossexperience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the balancesheet date is disclosed in Note 48 to the financial statements.Depreciation chargeProperty, plant and equipment and investment property are depreciated on a straight-line basis over their estimated useful lives.Management estimates the useful lives of these property, plant and equipment and investment property to be within 2 to 50 years. Thecarrying amount of the Group’s property, plant and equipment and investment property at 31 December 2011 was $1,358,259,000(2010: $1,303,209,000). Changes in the expected level of usage and technological developments could impact the economic usefullives and the residual values of these property, plant and equipment and investment property, and therefore future depreciation chargescould be revised.Revenue recognition and provision for foreseeable lossesThe Group has recognised revenue from long-term contracts by reference to the stage of completion. The bases for measuring thestage of completion are described in Note 3(k)(ii). Significant judgement based on management’s knowledge and experience is requiredin determining the appropriate stage of completion and estimating a reasonable contribution margin or expected losses for revenueand costs recognition.Allowance for inventory obsolescenceThe allowance for inventory obsolescence is based on estimates from historical trends and expected utilisation of inventories. Theactual amount of inventory write-offs could be higher or lower than the allowance made. The allowance for inventory obsolescence ofthe Group as at 31 December 2011 was $187,674,000 (2010: $195,316,000).Provision for warrantyThe provision for warranty is based on estimates from known and expected warranty work to be performed after completion.The warranty expense incurred could be higher or lower than the provision made. The provision for warranty of the Group as at31 December 2011 was $188,785,000 (2010: $188,102,000).
SINGAPORE TECHNOLOGIES ENGINEERING LTD Annual Report 2011137NOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(u)Significant accounting estimates and judgements (continued)(ii)Critical judgements made in applying accounting policiesIn the process of applying the Group’s accounting policies, management has made certain judgements, apart from those involvingestimations, which have significant effect on the amounts recognised in the financial statements.The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the group-wideprovision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain duringthe ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxeswill be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differenceswill impact the income tax and deferred tax provisions in the period in which such determination is made.In addition, certain subsidiaries of the Group have potential tax benefits arising from unutilised tax losses, unabsorbed wear and tearallowances and other temporary differences, which are available for set-off against future taxable profits. Significant judgement isinvolved in determining the availability of future taxable profits against which the Group can utilise the tax benefits therefrom. The useof the potential tax benefits is also subject to the agreement of the tax authorities and compliance with certain provisions of the taxlegislation of the respective countries in which the subsidiaries operate. Where the final outcome of these matters is different fromthe amounts that were initially recognised, such differences will impact the income tax provision and recognised deferred tax assetsrelating to the potential tax benefits in the period in which such determination is made.The carrying amount of the Group’s deferred tax assets was $113,167,000 (2010: $118,794,000), tax payables was $168,241,000(2010: $187,020,000) and deferred tax liabilities was $84,090,000 (2010: $58,216,000) as at 31 December 2011.(v)Future changes in accounting policiesA number of new standards, amendments to standards and interpretations have been issued but not yet effective, and have not been applied inpreparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Group.4. RevenueRevenue represents invoiced value of sales/services less returns and discounts given and billings recognised on contracts as follows:Group2011 2010$’000 $’000Sale of goods 2,256,546 2,599,167Service income 3,218,669 2,660,087Contract revenue 515,663 725,2195,990,878 5,984,473
Page 2 and 3: 118 SIMPLY SMARTERNOTES TO THE FINA
Page 70 and 71:
186 SIMPLY SMARTERNOTES TO THE FINA
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
show all

notes to the financial statements - Singapore Technologies ...

Create successful ePaper yourself

Delete template?

Save as template?