3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.15 Key management personnel
Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and
controlling the activities of the Group.
3.16 Provisions
A provision is recognised in the balance sheet when there is a legal or constructive obligation as a result of a past event, and
it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, 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, where appropriate, the risks specific to the liability.
(i)
Warranties
The provision for warranties is based on estimates made from historical warranty data associated with similar products
and services. Claims, when incurred, are charged against this provision.
(ii)
Restructuring
A provision for restructuring is recognised if a detailed formal plan for the restructuring exists and the Group has
raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan
or announcing its main features to those affected by it. Future operating losses are not provided for.
(iii)
Reinstatement
Operating lease improvement reinstatement costs are provided at the present value of expected costs to settle the
obligation using estimated cash flows. The cash flows are discounted at a current pre-tax rate that reflects the risks
specific to the reinstatement liability. The unwinding of the discount is expensed as incurred and recognised in the
income statement as a finance cost. The estimated future costs of reinstatement are reviewed annually and adjusted
as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from
the cost of the asset.
3.17 Revenue recognition
Revenue is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the
period arising from the course of activities of the Group and is shown net of any related sales taxes, estimated returns, discount
and volume rebates. The Group is acting as a principal when it has exposure to the significant risks and rewards associated
with the sale of goods or rendering of services.
Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer,
there is neither continuing management involvement to the degree usually associated with ownership nor effective control
over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
73
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
