Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

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Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
2. Summary of signifi cant accounting policies (contd.)
2.15 Impairment of non-fi nancial assets (contd.)
Impairment losses are recognised in profi t or loss except for assets that are previously revalued where the
revaluation was taken to other comprehensive income. In this case the impairment is also recognised in
other comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. A previously recognised impairment loss
is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal
is recognised in profi t or loss unless the asset is measured at revalued amount, in which case the reversal
is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
2.16 Inventories
Inventories are stated at lower of cost and net realisable value. Cost incurred in bringing the inventories to
their present location and condition are accounted for as follows:
- Raw materials and consumables: costs of purchases on a fi rst-in fi rst-out method or weighted
average cost formula.
- Finished goods and work-in-progress: costs of raw materials, direct labour, other direct costs and
appropriate proportions of manufacturing overheads based on normal operating capacity.
- Unsold properties: cost associated with the acquisition of land, direct costs and appropriate
proportions of common costs.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs
of completion and the estimated costs necessary to make the sale.
2.17 Construction and service contracts
Where the outcome of a construction or service contract can be reliably estimated, contract revenue and
contract costs are recognised as revenue and expenses respectively by using the stage of completion
method. The stage of completion is measured by reference to either the proportion of costs incurred todate
to the total estimated costs or the completion of a physical proportion of contract work to-date.
Where the outcome of a construction or service contract cannot be reliably estimated, contract revenue
is recognised to the extent of contract costs incurred that are likely to be recoverable. Contract costs are
recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is
recognised as an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract
work, claims and incentive payments to the extent that it is probable that they will result in revenue and they
are capable of being reliably measured.
When the total of costs incurred on construction or service contracts plus recognised profi ts (less
recognised losses) exceed progress billings, the balance is classifi ed as amount due from customers on
contracts. When progress billings exceed costs incurred plus, recognised profi ts (less recognised losses),
the balance is classifi ed as amount due to customers on contracts.
Cahya Mata Sarawak Berhad