ANNUAL REPORT 2008 - Gorenje Group

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bates. Revenue is recognised when the significant risks and rewards of ownership have been transferred
to the buyer, recovery of the consideration is probable, the associated costs and possible return
of goods can be estimated reliably, and there is no continuing management involvement with
the goods, and when the revenue can be measured reliably.
Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For
sales of goods, transfer usually occurs when the product is received at the customer’s warehouse;
however, for some international shipments transfer occurs upon loading the goods onto the relevant
carrier.
(ii) Revenue from services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion
of the transaction at the reporting date. The stage of completion is assessed by reference
to surveys of work performed.
(iii) Royalties (trademarks)
Royalties are recognised in profit or loss in accordance with terms of the relevant agreement; the
sale generated on individual geographical area is used as the basis.
(iv) Rental income
Rental income from investment property is recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives granted are recognised as an integral part of the total rental
income, over the term of the lease.
(m) Government grants
All other types of government grants are recognised initially as deferred income when there is reasonable
assurance that they will be received and that the Company will comply with the conditions
associated with the grant. Grants that compensate the Company for expenses incurred are recognised
in profit or loss on a systematic basis in the same periods in which the expenses are recognised.
Grants that compensate the Company for the cost of an asset are recognised in profit or loss
on a systematic basis over the useful life of the asset.
(n) Finance income and expense
Finance income comprises interest income on funds invested (including available-for-sale financial
assets), dividend income, gains on the disposal of available-for-sale financial assets, and gains on
hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues
in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss
on the date that the Company’s right to receive payment is established, which in the case of quoted
securities is the ex-dividend date.
Finance expense comprises interest expense on borrowings, foreign exchange losses, impairment
losses recognised on financial assets and trade receivables, and losses on hedging instruments that
are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective
interest method.
(o) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in
profit or loss except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted
or substantively enacted at the reporting date, and any adjustment to tax payable in respect
of previous years