SEC Form 20-IS - iRemit Global Remittance

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d. Contingencies
The Parent Company is currently involved in various proceedings. The estimate of the
probable costs for the resolution of these claims has been developed in consultation with
outside counsel handling the defense in these matters and is based upon an analysis of
potential results. The Parent Company currently does not believe these proceedings will have
a material effect on the Parent Company’s financial position. It is possible, however, that
future results of operations could be materially affected by changes in the estimates or in the
effectiveness of the strategies relating to these proceedings (see Note 24).
e. Determination of whether the Parent Company is acting as a principal or an agent
The Parent Company assesses its revenue arrangements against the following criteria to
determine whether it is acting as a principal or an agent:
• whether the Parent Company has primary responsibility for providing the goods and
services;
• whether the Parent Company has inventory risk;
• whether the Parent Company has discretion in establishing prices; and
• whether the Parent Company bears the credit risk.
If the Parent Company has determined it is acting as a principal, revenue is recognized on a
gross basis with the amount remitted to the other party being accounted for as part of costs and
expenses.
If the Parent Company has determined it is acting as an agent, only the net amount retained is
recognized as revenue.
The Parent Company assessed its revenue arrangements and concluded that it is acting as
principal in some arrangements and as an agent in other arrangements.
Estimates
a. Credit losses on receivables
The Parent Company reviews its receivables at each balance sheet date to assess whether an
allowance for credit losses should be recorded in the parent company balance sheet. In
particular, judgment by management is required in the estimation of the amount and timing of
future cash flows when determining the level of allowance required. Such estimates are based
on assumptions about a number of factors such as length of the Parent Company’s relationship
with counterparties (e.g., agents and couriers), current credit status, average age of accounts,
collection and historical loss experience. Actual results may differ, resulting in future changes
to the allowance.
As of December 31, 2011, accounts receivable and other receivables are carried in the parent
company balance sheet at P=1.00 billion and P=0.14 billion, respectively. As of
December 31, 2010, accounts receivable and other receivables are carried in the balance sheet
at P=1.12 billion and P=0.14 billion, respectively. The Parent Company has assessed that there
is no need to recognize impairment losses on its receivables as of December 31, 2011 and
2010.
*SGVMC116501*