cover rationale - ChartNexus
cover rationale - ChartNexus
cover rationale - ChartNexus
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NOTES TO THE FINANCIAL STATEMENTS 31 AUGUST 2002 (CONTINUED)<br />
106<br />
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)<br />
(s) Bonds<br />
MALAYSIAN RESOURCES CORPORATION BERHAD<br />
Bonds issued by the Group are stated at net proceeds received on issue. The bonds<br />
issuance expenses which represents the difference between the net proceeds and the<br />
total amount of the payment of the bonds are allocated to periods over the term of the<br />
bonds at a constant rate on the carrying amounts and are charged to the income<br />
statement.<br />
(t) Deferred liabilities<br />
Deferred liabilities represent the estimated costs for the design and construction of the<br />
Kuala Lumpur central railway station, at an amount equivalent to the value of commercial<br />
land alienated to a subsidiary as consideration. The deferred liabilities are reduced<br />
progressively as and when cost are incurred in respect of the abovementioned project.<br />
(u) Deferred taxation<br />
The tax expense is determined on the basis of tax effect accounting using the liability<br />
method. Deferred taxation is recognised for all material timing differences between<br />
accounting and taxable income. The tax effect of timing differences that result in a debit<br />
balance or a debit to the deferred tax balance is not carried forward unless there is a<br />
reasonable expectation of its realisation.<br />
The potential tax saving relating to a tax loss carry forward is only recognised if there is<br />
assurance beyond any reasonable doubt that future taxable income will be sufficient for<br />
the benefit of the loss to be realised.<br />
Additional taxes have been recognised to the extent that dividends from subsidiaries,<br />
jointly controlled entities and associates are expected to result in such taxes. No taxes<br />
have been recognised for other unremitted earnings since these amounts are considered<br />
to be permanently reinvested by the companies concerned.<br />
(v) Interest capitalisation<br />
Interest incurred on borrowings relating to the purchase of property, plant and<br />
equipment is capitalised until the assets are ready for their intended use. Interest relating<br />
to development properties is capitalised during the periods in which the activities to<br />
prepare and develop the properties are carried out.<br />
(w) Cash and cash equivalents<br />
For the purposes of the cash flow statements, cash and cash equivalents comprise cash<br />
in hand, bank balances, demand deposits, bank overdrafts and short term, highly liquid<br />
investments that are readily convertible to known amounts of cash and which are subject<br />
to an insignificant risk of changes in value.<br />
(x) Revenue recognition<br />
Revenue are recognised upon delivery of products and customer acceptance or upon<br />
completion of the performance of services rendered to customers, after eliminating<br />
revenue derived within the Group .<br />
Revenue relating to long term contracts are accounted for using the percentage of<br />
completion method; the stage of completion is measured by reference to the actual<br />
costs incurred to date to estimated total costs for each contract.