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