FGV Annual Report 2012

33 F i n a n c i a l S t a t e m e n t s 2 0 1 2 P e n y a t a K e w a n g a n 3 SIGNIFICANT ACCOUNTING POLICIES (continued) (s) Revenue recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognised: (i) Revenue from sales of fresh fruit bunches (“FFB”), crude palm oil (“CPO”), palm kernel (“PK”) and rubber cup-lump Revenue is recognised upon the delivery of goods, net of sales taxes, rebates and discounts. Revenue is recognised when significant risks and rewards from ownership of the goods are transferred to the buyer. (ii) Revenue from production and distribution of fatty acids, vegetable oil, protein meal, refined sugar and molasses Revenue from production and distribution of fatty acids, vegetable oil, protein meal, refined sugar and molasses comprises the invoiced value for the sale of goods, net of sales taxes, rebates, and discounts. Revenue is recognised upon the delivery of goods when significant risk and rewards of ownership of the goods are transferred to the buyer. (iii) Subsidy from Government Subsidy received from the Government of Malaysia for certain products sold relates to the difference between estimated market price and the controlled price determined by the government for sale of the product in the domestic market. This subsidy is credited to profit or loss and recognised as part of revenue in the accounting period in which the corresponding sales of goods are recognised. (iv) Revenue from tolling arrangements Revenue from tolling arrangement is recognised when the related service is performed. (v) Interest income Interest income is recognised using the effective interest method. When a loan or a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables are recognised using the original effective interest rate. (vi) Management fees Management fees are recognised when the related service is performed. (vii) Rental income Rental income related to rental of properties and plants are recognised over the period of tenancy or usage, as appropriate. (viii) Dividend income Dividend income is recognised when the right to receive is established. (t) Dividend distribution Dividends on ordinary shares are recognised as liabilities when proposed or declared before the statement of financial position date. A dividend proposed or declared after the statement of financial position date, but before the financial statements are authorised for issue, is not recognised as a liability at the statement of financial position date. (u) Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposit held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.