40
SUNMOON FOOD COMPANY LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
2.1
Basis of preparation of financial statements
(Continued)
FRS 115 – Revenue from Contracts with Customers
FRS 115 introduces a comprehensive model that applies to revenue from contracts with customers and
supersedes all existing revenue recognition requirements under FRS. The model features a five-step analysis
to determine whether, how much and when revenue is recognised, and two approaches for recognising
revenue: at a point in time or over time. The core principle is that an entity recognises revenue when control
over promised goods or services is transferred to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. FRS 115 also introduces
extensive qualitative and quantitative disclosure requirements which aim to enable users of the financial
statement to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from
contracts with customers.
On initial adoption of this standard there may be a potentially significant impact on the timing and profile of
revenue recognition of the Group. Due to the recent release of this standard, the Group has not yet made a
detailed assessment of the impact of this standard. The Group plans to adopt the standard in the financial
year beginning on 1 January 2018 with either full or modified retrospective effect in accordance with the
transitional provisions, and will include the required additional disclosures in its financial statements for
that financial year.
2.2
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiaries. Subsidiaries are entities over which the Group has control. The Group controls an investee if
the Group has power over the investee, is exposed to or has rights to, variable returns from its involvement
with the investee, and the ability to use its power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a change in any of these elements of control.
Subsidiaries are consolidated from the date on which control is obtained by to the Group up to the effective
date on which control is lost, as appropriate.
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group
transactions are eliminated on consolidation. Unrealised losses may be an impairment indicator of the asset
concerned.
The financial statements of the subsidiaries are prepared for the same reporting period as that of the
Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are
changed to ensure consistency with the policies adopted by the Group.
