67 www.excelforce.com.my Notes to the Financial Statements (cont’d) 2. Basis of Preparation (cont’d) (c) Significant accounting judgements, estimates and assumptions (cont’d) Judgements The following are the judgements made by management in the process of applying the Group’s and the Company’s accounting policies that have the most significant effect on the amounts recognised in the financial statements: Satisfaction of performance obligations in relation to contracts with customers The Group and the Company are required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time or at a point in time in order to determine the appropriate method for recognising revenue. This assessment was made based on the terms and conditions of the contracts, and the provisions of relevant laws and regulation. The Group and the Company recognise revenue over time in the following circumstances: (a) the customer simultaneously receives and consumes the benefits provided by the Group’s and the Company’s performance as the Group and the Company performs; (b) the Group and the Company do not create an asset with an alternative use to the Group and to the Company and have an enforceable right to payment for performance completed to date; and (c) the Group’s and the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. Where the above criteria are not met, revenue is recognised at a point in time. Where revenue is recognised at a point of time, the Group and the Company assess each contract with customers to determine when the performance obligation of the Group and of the Company under the contract is satisfied. Digital assets The Group and the Company have considered its position on the accounting for digital assets for the financial year and has determined that the Group’s digital assets is classified as intangible assets. Digital assets do not meet the definition of a financial instrument because there is no right to receive cash (or another financial asset), and classification as inventory is not appropriate because the Group’s and the Company’s digital assets are not held for sale in the ordinary course of business. The Group and the Company holds digital assets for the purpose of staking and the Group and the Company have determined that the assets meet the definition of an intangible asset under MFRS 138 Intangible Assets. Determining the lease term of contracts with renewal option - Group and Company as lessee The Group and the Company determine the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised. The Group and the Company have several lease contracts that include extension options. The Group and the Company apply judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group and the Company reassess the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew. The Group and the Company include the renewal period as part of the lease term for leases of office spaces. The Group and the Company typically exercises its option to renew for these leases with renewal options.
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