Page 33 - TreasuryChinaTrust

Treasury China Trust Annual Report 2010 64

NOTES TO THE FINANCIAL STATEMENTS

Period from 19 May 2010 (date of constitution) to 31 December 2010

3 Summary of significant accounting policies (Continued)

(g) Employee benefits

(i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(iii) Unit-based payment transactions

Equity-settled unit-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the grant date. The fair value determined at the grant date of the equity-settled unit-based payments is expensed on a straight-line basis over the vesting period, based on the Trust’s estimate of the units that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value of unit options is measured using the Binomial option pricing method. The expected life used has been adjusted, based on management’s best estimate, for effects of behavioural considerations.

(h) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(i) Revenue recognition

Rental income receivable under operating leases is recognised in profit or loss on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Lease incentives granted are recognised as an integral part of the total rental to be received. Contingent rentals are recognised as income in the accounting period on a receipt basis. No contingent rentals are recognised if there are uncertainties due to the possible return of amounts received.

(j) Expenses

(i) Trustee’s fees and manager’s fees

Trustee’s and manager’s fees are recognised on an accrual basis based on the applicable formula stipulated in Note 1.

(ii) Property and administrative expenses

Property and administrative expenses are recognised on an accrual basis.