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49 48 Best World International Limited
Annual Report 2011
Best World International Limited
Annual Report 2011
2. Summary of Signifcant Accounting Policies (Cont’d)
Basis of Presentation (Cont’d)
The company’s fnancial statements have been prepared on the same basis, and as permitted by the
Companies Act, Chapter 50, no statement of income is presented for the company.
Basis of Preparation of the Financial Statements
The preparation of fnancial statements in conformity with generally accepted accounting principles requires
the management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the fnancial statements and the reported
amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates.
The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations,
management has made judgements in the process of applying the entity’s accounting policies. The areas
requiring management’s most diffcult, subjective or complex judgements, or areas where assumptions and
estimates are signifcant to the fnancial statements, are disclosed at the end of this footnote, where applicable.
Revenue Recognition
The revenue amount is the fair value of the consideration received or receivable from the gross infow of economic
benefts during the reporting year arising from the course of the activities of the entity and it is shown net of any
related sales taxes, estimated returns and rebates. Revenue from the sale of goods is recognised when
signifcant risks and rewards of ownership are transferred to the buyer, there is neither continuing managerial
involvement to the degree usually associated with ownership nor effective control over the goods sold, and the
amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured
reliably. Revenue from rendering of services that are of short duration is recognised when the services are
completed. Rental revenue is recognised on a time-proportion basis that takes into account the effective yield
on the asset on a straight-line basis over the lease term. Interest is recognised using the effective interest method.
Dividend from equity instruments is recognised as income when the entity’s right to receive payment is established.
Employee Benefts
Certain subsidiaries operate a defned contribution provident fund scheme, in which employees are entitled
to join upon fulflling certain conditions. The assets of the fund are held separately from those of the entity in an
independently administered fund. The entity contributes an amount equal to a fxed percentage of the salary
of each participating employee. Contributions are charged to proft or loss in the period to which they relate.
This plan is in addition to the contributions to government managed retirement beneft plans such as the Central
Provident Fund in Singapore which specifes the employer’s obligations which are dealt with as defned
contribution retirement beneft plans. For employee leave entitlement the expected cost of short-term employee
benefts in the form of compensated absences is recognised in the case of accumulating compensated absences,
when the employees render service that increases their entitlement to future compensated absences; and in the
case of non-accumulating compensated absences, when the absences occur. A liability for bonuses is recognised
where the entity is contractually obliged or where there is constructive obligation based on past practice.
2. Summary of Signifcant Accounting Policies (Cont’d)
Income Tax
The income taxes are accounted using the asset and liability method that requires the recognition of taxes
payable or refundable for the current year and deferred tax liabilities and assets for the future
tax consequence of events that have been recognised in the fnancial statements or tax returns. The
measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or
substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated.
Income tax expense represents the sum of the tax currently payable and deferred tax. Current and
deferred income taxes are recognised as income or as an expense in proft or loss unless the tax relates
to items that are recognised in the same or a different period outside proft or loss. For such items
recognised outside proft or loss the current tax and deferred tax are recognised (a) in other
comprehensive income if the tax is related to an item recognised in other comprehensive income and
( b) directly in equity if the tax is related to an item recognised directly in equity. Deferred tax assets and
liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying
amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary,
by the amount of any tax benefts that, based on available evidence, are not expected to be realised.
A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises
from the initial recognition of an asset or liability in a transaction which (i) is not a business combination;
and (ii) at the time of the transaction, affects neither accounting proft nor taxable proft (tax loss) .
A deferred tax liability or asset is recognised for all taxable temporary differences associated with
investments in subsidiaries except where the reporting entity is able to control the timing of the reversal
of the taxable temporary difference and it is probable that the taxable temporary difference will not reverse
in the foreseeable future or for deductible temporary differences, they will not reverse in the foreseeable
future and they cannot be utilised against taxable profts.
Foreign Currency Transactions
The functional currency is the Singapore dollar as it refects the primary economic environment in which
the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates
ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and
balances measured at fair value that are denominated in non-functional currencies are reported at the
rates ruling at the end of the reporting year and fair value dates respectively. All realised and unrealised
exchange adjustment gains and losses are dealt with in proft or loss except when recognised in other
comprehensive income and if applicable deferred in equity as qualifying cash fow hedges. The presentation
is in the functional currency.
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2011