3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.17 Revenue recognition
(continued)
Depending on the substance of sold software (license) along with related incidental maintenance and support, the Group
determines whether those represent a sale of goods or sale of services and recognises revenue accordingly.
Income on project work-in-progress is recognised using the stage of completion method (note 3.6).
Revenue from rendering of services that are short duration is recognised when the services are completed. Where a long-term
service involves an indeterminate number of acts over a specific time, revenue is recognised on a straight line basis, unless
there is evidence the cost to cost method (note 3.6) gives a better reflection of the state of completion.
Revenue for consignment goods sold to convenience stores which have not been sold to consumers is deferred and presented
in the balance sheet as deferred revenue. Revenue from sales of pre-paid phone cards and information technology maintenance
services for which services have not been rendered is deferred and presented in the balance sheet as deferred revenue. Upon
the expiry of pre-paid phone cards, any unutilised value of the cards is taken to income statement.
The Company recognises dividend income when the right to receive payment is established.
3.18 Finance income and finance costs
Finance income comprises interest income from banks and financial institutions and reclassification of net gains previously
recognised in other comprehensive income. Interest income is recognised as it accrues, using the effective interest method,
except where collection is contingent upon certain conditions being met, then such income is recognised when received.
Finance cost comprises interest expense on borrowings and unwinding of the discount on long-term contingent consideration
and reclassification of net losses previously recognised in other comprehensive income. Interest expense and similar charges
are expensed in the income statement in the period in which they are incurred unless these are directly attributable to the
acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, then borrowing cost are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale.
3.19 Tax
Tax on the results for the year comprises current and deferred tax. Tax is recognised in the income statement except for the
tax effects of items recognised directly in equity, which are recognised in the statement of changes in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwill not
deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
74
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
