2.
Summary of significant accounting policies (cont’d)
2.20 Employee benefits
(i)
Defined contribution plans
The Group makes contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension
scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the
related service is performed.
(ii) Employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated
liability for leave is recognised for services rendered by employees up to the end of the reporting period.
(iii) Equity-settled share-based payment transactions
Selected employees of the Group received remuneration in the form of shares as consideration for services rendered.
The cost of equity-settled share-based payment transactions is measured by reference to the fair value of the shares at
the grant date and is recognised in profit or loss with recognition of a corresponding equity.
2.21 Leases
The determination of whether an arrangement is, or contains a lease, is based on the substance of the arrangement at inception
date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a
right to use the asset, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance
with the transitional requirements of INT FRS 104.
(i)
As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased
item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of
the minimum lease payments. Any initial direct costs are also added to the amount capitalised.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged to the profit or loss.
Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if
there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over the lease term.
The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease
term on a straight-line basis.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
Hock Lian Seng Holdings Limited
Annual report 2014
61
