2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
2.3
Standards issued but not yet effective
(Continued)
FRS 115 Revenue from Contracts with Customers
FRS 115 establishes a five-step model that will apply to revenue arising from contracts with customers.
Under FRS 115, revenue is recognised at an amount that reflects the consideration which an entity expects
to be entitled in exchange for transferring goods or services to a customer. The principles in FRS 115
provide a more structured approach to measuring and recognising revenue when the promised goods
and services are transferred to the customer i.e. when performance obligations are satisfied.
Key issues for the Group include identifying performance obligations, accounting for contract modifications,
applying the constraint to variable consideration, evaluating significant financing components, measuring
progress toward satisfaction of a performance obligation, recognising contract cost assets and addressing
disclosure requirements.
Either a full or modified retrospective application is required for annual periods beginning on or after
1 January 2018 with early adoption permitted. The Group is currently assessing the impact of FRS 115
and plans to adopt the new standard on the required effective date.
FRS 109 Financial Instruments
FRS 109 introduces new requirements for classification and measurement of financial assets, impairment
of financial assets and hedge accounting. Financial assets are classified according to their contractual cash
flow characteristics and the business model under which they are held. The impairment requirements in
FRS 109 are based on an expected credit loss model and replace the FRS 39 incurred loss model. Adopting
the expected credit losses requirements will require the Group to make changes to its current systems
and processes.
The Group currently measures one of its investments in unquoted equity securities at cost. Under FRS
109, the Group will be required to measure the investment at fair value. Any difference between the
previous carrying amount and the fair value would be recognised in the opening retained earnings when
the Group apply FRS 109.
FRS 109 is effective for annual periods beginning on or after 1 January 2018 with early application
permitted. Retrospective application is required, but comparative information is not compulsory. The
Company is currently assessing the impact of FRS 109 and plans to adopt the standard on the required
effective date.
I N N O T E K L I M I T E D
A N N U A L R E P O R T 2 0 1 5
52
NOTES TO THE FINANCIAL
STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
