NOTES TO THE FINANCIAL STATEMENTS Cont’d 2. Significant accounting policies cont’d (n) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. (i) Employee entitlements The long service leave provision is measured at the present value of expected future payments in respect of services provided by the employees up to the end of the reporting period. Forecast future salary levels, experience of employees, turnover and periods of service are considered in determining the liability. (ii) Restoration and rehabilitation Provision for restoration and rehabilitation is recognised in respect of the obligation such as decommissioning and demolition of all industrial and support infrastructure from the site and revegetation of the land. The provision is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date, based on current legal requirements and technology. Future restoration costs are reviewed annually and any changes are reflected in the present value of the restoration provision at the end of the reporting period. (o) Revenue and other income (i) Revenue Revenue is measured based on the consideration specified in a contract with a customer in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. The Group or the Company recognises revenue when (or as) it transfers control over a product or service to customer. An asset is transferred when (or as) the customer obtains control of the asset. The Group or the Company transfers control of a good or service at a point in time unless one of the following over time criteria is met: (a) the customer simultaneously receives and consumes the benefits provided as the Group or the Company performs; (b) the Group’s or the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (c) the Group’s or the Company’s performance does not create an asset with an alternative use and the Group or the Company has an enforceable right to payment for performance completed to date. (ii) Rental income Rental income from property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. PRESS METAL ALUMINIUM HOLDINGS BERHAD 231
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