SCI Annual Report 2015

SCI Electric Public Company Limited
SCI ELECTRIC PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
(FORMERLY KNOW AS “SCI ELECTRIC MANUFACTURER COMPANY LIMITED”)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE TEAR ENDED 31 DECEMBER 2015
3.9 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average
method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition
of the inventory, such as import duties and transportation charges, less all attributable discounts, allowances or rebates.
The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs
and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable
value is the estimate of the selling price in the ordinary course of business, less applicable variable selling expenses.
Allowance is made, where necessary, for obsolete, slow-moving and defective inventories.
3.10 Construction contracts
A construction contract is a contract specifically negotiated for the construction of an asset or a combination of
assets that are closely interrelated or interdependent in terms of their design, technology and functions or their
ultimate purpose or use.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised
to the extent of contract costs incurred where it is probable those costs will be recoverable. Contract costs are
recognised as expenses in the period in which they are incurred.
When the outcome of a construction contract can be estimated reliably and it is probable that the contract
will be profitable, contract revenue is recognised over the period of the contract. When it is probable that total
contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
Costs incurred in the year in connection with future activity on a contract are excluded from contract costs
in determining the stage of completion. They are presented as inventories, prepayments or other assets,
depending on their nature.
The Group presents as an asset the gross amount due from customers for contract work for all contracts in
progress and for which costs incurred plus recognised profits (less recognised losses) exceed progress billings.
Progress billings not yet paid by customers and retention are included within “Unbilled completed work” and for
the money the Company collected in excess of revenue recognized in the reporting period is shown “Unearned
revenue” in statement of financial position.
The Group presents as a liability the gross amount due to customers for contract work for all contracts in
progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).
Costs incurred in construction include direct materials, direct labor and construction overheads. General
and administrative expenses are charged to the profit or loss when incurred.
3.11 Property, plant and equipment
Land, plant and equipment are initially recorded at cost. All assets except land are stated at historical cost less
accumulated depreciation.
Depreciation is calculated on the straight line method to write off the cost of each asset, to its residual value
over the estimated useful life as follows:
Buildings and buildings improvement 20 years
Machineries and equipment
5 - 10 years
Office equipment
2 - 8 years
Vehicles
5 years
200