177 MISC BERHAD Annual Report 2015 2. Significant accounting policies (cont’d.) 2.4 Pronouncements not yet in effect (cont’d.) Effective for annual periods beginning on or after 1 January 2016: (cont’d.) (ii) MFRS 15 Revenue from Contracts with Customers (cont’d.) Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Group is currently assessing the impact of MFRS 15, if any, and plans to adopt the new standard on the required effective date. 2.5 Significant accounting estimates and judgements (a) Critical judgements made in applying accounting policies The following are the judgements made by management in applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements: (i) Operating lease commitments - the Group as lessor In its ordinary course of business, the Group enter into lease arrangements with related and third parties on its ships and offshore floating assets. Where the Group has determined that it retains all the significant risks and rewards of ownership of these ships and offshore floating assets, the ships and offshore floating assets are recognised and classified as part of non-current assets of the Group and of the Corporation. (ii) Construction contracts The Group recognises revenue and expenses from construction contracts in the income statement by using the stage of completion method. The stage of completion is measured by reference to the completion of physical proportion of the contract work. Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and costs, as well as the recoverability of the construction costs. In making this judgement, the Group evaluates based on past experience and by relying on the work of internal specialists.
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