Hock Lian Seng Holdings Limited - Annual Report 2015 - page 55

Notes to the Financial Statements
31 December 2015
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2.16 Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions
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through the amortisation process.
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De-recognition
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2.17 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
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obligation and the amount of the obligation can be estimated reliably.
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Provisions for maintenance and warranties
The Group provides for maintenance and warranty claims on contractual items with customers after the
substantial completion of projects.
The provisions for maintenance and warranties represent the best estimate of the Group’s legal or constructive
obligations at the balance sheet date. The majority of the costs is expected to be incurred over the applicable
warranty periods. The assumptions used to estimate maintenance and warranties provisions are reviewed
periodically in light of actual experience.
ANNUAL REPORT 2015 53