ANNUAL REPORT 2025 155 NOTES TO THE FINANCIAL STATEMENTS 200901023978 (867077-X) Kimlun Corporation Berhad (Incorporated in Malaysia) 2. Material accounting policy information (cont'd) 2.18 Contract cost assets (cont'd) (b) Costs to fulfill a contract 3. Significant accounting judgements and estimates 3.1 Judgements made in applying accounting policies Capitalisation of borrowing costs 3.2 Key sources of estimation uncertainty In the process of applying the Group's and of the Company's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements. The preparation of the Group’s and of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below: The costs incurred to fulfill contracts with customers of the Group mainly comprise of costs incurred for the development and construction of its property development projects. Contract cost assets are amortised on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates as disclosed in Note 2.17(d). The Group capitalises borrowing costs during the period in which development actvities are undertaken or where there are on-going development activities which prepare the land properties for the intended use or sale. Borrowing costs are capitalised until the asset is substantially completed for its intended use or sale. Significant judgement is involved in determining whether the development activities carried out meet the criteria of active development in ascertaining whether borrowing costs incurred should be capitalised. Besides that, management is also required to estimate the appropriate apportionment of borrowing costs eligible for capitalisation to the various development. - 35 -
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