Yinson Annual Report 2021

314 YINSON HOLDINGS BERHAD SECTION 07 : ACCOUNTABILITY INDEPENDENT AUDITORS’ REPORT (CONT'D) to the members of Yinson Holdings Berhad (Incorporated in Malaysia) Registration No. 199301004410 (259147-A) Key audit matters How our audit addressed the key audit matters 1) Revenue recognition for FPSO projects (continued) (b) Revenue recognition for FPSO Abigail-Joseph Refer to Note 5(a)(ii), Note 6, Note 7 and Note 33(a) to the financial statements. During the financial year, the finance lease on FPSO Abigail-Joseph commenced following the issuance of first oil certificate. As a manufacturer lessor, the Group recognised revenue of RM1,095 million and selling profit of RM111 million in the consolidated financial statements for the financial year ended 31 January 2021. Determining the fair value of the underlying asset at lease commencement requires significant estimation and critical judgements to be exercised by management in assessing contractual terms and determining the key assumptions applied. These key assumptions included the lease term, residual value, implicit interest rate of the lease and determining the minimum lease payments that are expected to be received by the Group over the lease term. Focus is placed on this area due to the complexity of the revenue recognised and the significant estimates and critical judgements exercised by management in assessing the contractual terms and determining the above key assumptions. Audit procedures performed over this key audit matter were as follows (continued): (b) Revenue recognition for FPSO Abigail-Joseph t 3FBE UIF DPOUSBDUT BOE EJTDVTTFE XJUI NBOBHFNFOU on the relevant terms and assessed the resultant financial implications; t %JTDVTTFE BOE SFWJFXFE NBOBHFNFOU T CBTJT BOE assumptions used for estimating the selling profit for the leased asset upon lease commencement in accordance with MFRS 16; t $PNQBSFE UIF MFBTF QBZNFOUT UP IJTUPSJDBM operational performance of other FPSOs of the Group to ascertain that these are reasonable; t "TTFTTFE UIF CBTJT PG NBOBHFNFOU T SFTJEVBM WBMVF estimates on the FPSO; t 5FTUFE UIF NBUIFNBUJDBM BDDVSBDZ PG UIF mOBODF MFBTF receivables calculations prepared by management; and t &WBMVBUFE UIF BEFRVBDZ PG UIF (SPVQ T EJTDMPTVSFT included in the consolidated financial statements. Based on our procedures performed, no material exceptions were noted. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters (continued)