Page 74 - Forterra

72 FORTERRA
ANNUAL REPORT 2012
NOTES TO THE
FINANCIAL STATEMENTS
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) 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.
Service charge income from rendering of services is recognised when the services are
performed.
(k) Expenses
(i) Trustee-Manager’s fees
Trustee-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.
(l) Finance income and finance costs
Finance income comprises interest income on funds invested, dividend income and gains on
the disposal of available-for-sale financial assets. Interest income is recognised as it accrues
in profit or loss, using the effective interest method. Dividend income is recognised in profit
or loss on the date that the Group’s right to receive payment is established, which in the case
of quoted securities is normally the ex-dividend date.
Finance costs comprise interest expenses on borrowings and amortisation of transaction
costs. Borrowing costs that are not directly attributable to the acquisition, construction or
production of a qualifying asset are recognised in profit or loss using the effective interest
method.
(m) Taxation
Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognised in profit or loss except to the extent that they relate to items recognised directly
in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for
the year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years. As the Group’s property portfolio is
located in the PRC, the foregoing tax rate refers to the prevailing corporate income tax rate
of 25% in the PRC.