Content2011 - PETRONAS Gas Berhad

Notes to the Financial Statements
31 MarCh 2011
2. Signifi cant Accounting Policies (Continued)
2.11 Cash and cash equivalents
153 annUaL report 2011
Cash and cash equivalents consist of cash on hand and bank balances, deposits with licensed fi nancial institutions and highly liquid
investments which have insignifi cant risk of changes in value.
2.12 Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
Cost of maintenance materials and spares consists of the invoiced value from suppliers and import duty charges and is determined
on a weighted average basis.
Cost of liquefi ed gases and water is determined on a weighted average basis.
2.13 Provisions
A provision is recognised if, as a result of a past event, the Group or the Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting
date. Provisions are reviewed at each reporting date and adjusted to refl ect the current best estimate.
Where it is not probable that an outfl ow of economic benefi ts will be required, or the amount cannot be estimated reliably, the
obligation is disclosed as a contingent liability, unless the probability of outfl ow of economic benefi ts is remote. Possible obligations,
whose existence will only be confi rmed by the occurrence or non-occurrence of one or more future events, not wholly within the
control of the Group, are not recognised in the fi nancial statements but are disclosed as contingent liabilities unless the possibility of
an outfl ow of economic resources is considered remote.
2.14 Employee benefi ts
i) Short term benefi ts
Wages and salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated
services are rendered by employees of the Group and the Company.
ii) Defi ned contribution plans
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund
(EPF). Such contributions are recognised as an expense in the profi t or loss as incurred.