Notes to the Financial Statements
(Cont’d)
For the financial year ended 30 April 2016
(In Singapore Dollar)
ANNUAL REPORT 2016
DRIVING IT UP
| 47
2.
Summary of significant accounting policies (cont’d)
2.3
Standards issued but not yet effective (cont’d)
FRS 115
Revenue from Contracts with Customers
FRS 115 establishes a five-step model that will apply to revenue arising from contracts with customers.
Under FRS 115, revenue is recognised at an amount that reflects the consideration which an entity expects
to be entitled in exchange for transferring goods or services to a customer. The principles in FRS 115
provide a more structured approach to measuring and recognising revenue when the promised goods and
services are transferred to the customer i.e. when performance obligations are satisfied.
Key issues for the Group include identifying performance obligations, accounting for contract
modifications, applying the constraint to variable consideration, evaluating significant financing
components, measuring progress toward satisfaction of a performance obligation, recognising contract
cost assets and addressing disclosure requirements.
Either a full or modified retrospective application is required for annual periods beginning on or after
1 January 2018 with early adoption permitted. The Group is currently assessing the impact of FRS 115 and
plans to adopt the new standard on the required effective date.
FRS 109
Financial
Instruments
FRS 109 introduces new requirements for classification and measurement of financial assets, impairment
of financial assets and hedge accounting. Financial assets are classified according to their contractual
cash flow characteristics and the business model under which they are held. The impairment requirements
in FRS 109 are based on an expected credit loss model and replace the FRS 39 incurred loss model.
Adopting the expected credit losses requirements will require the Group to make changes to its current
systems and processes.
The Group currently measures one of its investments in unquoted equity securities at cost. Under FRS 109,
the Group will be required to measure the investment at fair value. Any difference between the previous
carrying amount and the fair value would be recognised in the opening retained earnings when the Group
apply FRS 109.
FRS 109 is effective for annual periods beginning on or after 1 January 2018 with early application
permitted. Retrospective application is required, but comparative information is not compulsory. The
Group is currently assessing the impact of FRS 109 and plans to adopt the standard on the required
effective date.
