FGV Audited Financial Statements 2019

56 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (t) Revenue recognition (continued) (i) Revenue from contracts with customers (continued) Quality claims The Group’s obligation to provide quality claims against off-spec goods under the Group’s standard contractual terms is recognised as a provision. Receivables, contract asset and contract liabilities A receivable is recognised when the goods are delivered or services are rendered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Contract asset is the right to consideration in exchange for goods or services that the Group has transferred to the customers. A contract asset is recognised when the services rendered by the Group exceed the amount already billed. Contract liability is the Group’s obligation to transfer goods or services to customers. A contract liability is recognised when the Group has received the sales consideration in advance or billings or payments by the customers exceed the services rendered by the Group. Contract cost During the year, the Group has elected the practical expedient to recognise contract cost incurred related to contracts with period of less than one year as an expense when incurred.