EXCEL FORCE MSC BERHAD 59 Notes to the Financial Statements (cont’d) 2. BASIS OF PREPARATION (CONT’D) c) Significant accounting judgements, estimates and assumptions (cont’d) Judgements The following are the judgementsmade bymanagement in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements: Satisfaction of performance obligations in relation to contracts with customers TheGroup is required to assess each of its contractswith customers to determinewhether performance obligations are satisfied over time or at a point in time in order to determine the appropriate method for recognising revenue. This assessment wasmade based on the terms and conditions of the contracts, and the provisions of relevant laws and regulation. The Group recognises revenue over time in the following circumstances: (i) the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs; (ii) the Group does not create an asset with an alternative use to the Group and has an enforceable right to payment for performance completed to date; and (iii) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. Where the above criteria are not met, revenue is recognised at a point in time. Where revenue is recognised at a point in time, the Group assesses each contract with customers to determine when the performance obligation of the Group under the contract is satisfied. Determining the lease term of contracts with renewal and termination options - Group as lessee The Group determines the lease term with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any period covered. The Group has several lease contracts that include extension options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew the lease. It considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew. TheGroup includes the renewal periodaspart of the lease termfor leasesof office spaces and computerequipment. The Group typically exercises it option to renew for those leases with renewal options. Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period are set out below:
RkJQdWJsaXNoZXIy NDgzMzc=