cover rationale - ChartNexus

NOTES TO THE FINANCIAL STATEMENTS 31 AUGUST 2002 (CONTINUED)
104
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) Income recognition on development properties
MALAYSIAN RESOURCES CORPORATION BERHAD
Profit on the sale of development properties is recognised on the percentage of
completion method. Anticipated losses are immediately recognised in the income
statements.
No profit is recognised where development is in its initial stage or has not reached a
stage of completion where it is possible to determine the financial outcome of the
development with reasonable accuracy.
(m) Expressway development expenditure
Expressway development expenditure represents cost incurred, which includes borrowing
cost relating to the financing of the development, in connection with the Ipoh-Lumut
Expressway Project.
The total development expenditure incurred for the project will be amortised over the
remaining concession period upon completion of the construction of the expressway and
commencement of collection of toll revenues. The amount capitalised is charged as an
expense in the income statement in the financial year in which it is identified that no
future economic benefits are expected to flow from the expressway development
expenditure.
(n) Project development expenditure
Expenditure incurred prior to the date of commencement of commercial operation is
capitalised as project development expenditure and amortised over a period of not more
than ten (10) years when operation commences. The amount capitalised is charged as an
expense in the income statement in the financial year in which it is identified that no
future economic benefits are expected to flow from the project development
expenditure.
(o) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes where
relevant, appropriate proportions of overheads and is determined using the weighted
average and specific identification method where applicable after providing for all items
considered obsolete or slow moving.
(p) Receivables
Receivables are carried at anticipated realisable value. An estimate is made for doubtful
debts based on a review of all outstanding amounts at the financial year end. Bad debts
are written off during the financial year in which they are identified.
(q) Construction contract
When the outcome of a construction contract cannot be estimated reliably, contract
revenue is recognised only to the extent of contract costs incurred that it is probable
will be recoverable and contract costs are recognised as expenses.
When the outcome of a construction contract can be estimated reliably, contract revenue
and contract costs are recognised over the period of the contract as revenue and
expense respectively.