61
FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT 2014
NOTES TO THE
FINANCIAL STATEMENTS
(cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Contract Customers
When the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference
to the stage of completion of the contract activity at the end of the reporting period, measured based on the
proportion that contract costs incurred for work performed to date bear to the estimated total contract costs
except where this would not be representative of the stage of completion. Variations in contract work, claims
and incentive payments are included to the extent that they have been agreed with the customer.
When the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent
of contract costs incurred that it is probable will 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.
Employee Benefits
(i)
Short term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured
on an undiscounted basis and are recognised in profit or loss in the period in which the associated
services are rendered by employees of the Group.
(ii)
Defined contribution plans
The Group’s contributions to defined contribution plans are recognised in profit or loss in the period to
which they relate. Once the contributions have been paid, the Group has no further liability in respect
of the defined contribution plans.
(iii) Defined benefit plans
The Group’s net obligation in respect of defined benefit retirement plans is calculated separately for each
plan by estimating the amount of future benefit that employees have earned in return for their service in
the current and prior periods; that benefit is discounted to determine its present value. The calculation
is performed annually by a qualified actuary using the projected unit credit with service increment
method. When the calculation results in a benefit to the Group, the recognised asset is limited to the
total of any unrecognised past service costs and the present value of economic benefits available in
the form of any future refunds from the plan or reductions in future contributions to the plan. In order
to calculate the present value of economic benefits, consideration is given to any minimum funding
requirements that apply to any plan in the Group. An economic benefit is available to the Group of it is
realisable during the life of the plan, or on settlement of the plan liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to the past service
by employees is recognised in profit or loss on a straight-line basis over the average period until the
benefits become vested. To the extent that the benefits vest immediately, the expense is recognised
immediately in profit or loss.
The Group recognises all actuarial gains and losses arising from defined benefit plans in other
comprehensive income and all expenses related to defined benefit plans in personnel expenses in
profit or loss.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when
the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in
the fair value of plan assets, change in the present value of defined benefit obligation and any related
actuarial gains and losses and past service cost that had not previously been recognised.
