51
Notes to Financial Statements
December 31, 2014
2. Summary of Significant Accounting Policies (cont’d)
ADOPTION OF NEW AND REVISED STANDARDS (cont’d)
FRS 115 Revenue From Contracts with Customers
In November 2014, FRS 115 was issued which establishes a single comprehensive model for entities to use in
accounting for revenue arising from contracts with customers. FRS 115 will supersede the current revenue
recognition guidance including FRS 18 Revenue, FRS 11 Construction Contracts and the related Interpretations
when it becomes effective.
The core principle of FRS 115 is that an entity should recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue
recognition:
• Step 1: Identify the contract (s) with a customer.
• Step 2: Identify the performance obligations in the contract.
• Step 3: Determine the transaction price.
• Step 4: Allocate the transaction price to the performance obligations in the contract.
• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
Under FRS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control”
of the goods or services underlying the particular performance obligation is transferred to the customer. More
prescriptive guidance has been added in FRS 115 to deal with specific scenarios. Furthermore, extensive disclosures
are required by FRS 115.
Management is currently evaluating the potential impact of the application of FRS 115 on the financial statements
of the Group and the Co-operative in the period of initial application.
The following table shows the topics addressed by the
Improvements to Financial Reporting Standards
:
Management is currently evaluating the potenial impact of the application of the above Improvements to Financial
Reporting Standards on the financial statements of the Group and the Co-operative in the period of initial application.
FRS
Subject of amendment
FRS 103
Business Combinations
Accounting for contingent consideration in a business
combination
Scope exceptions for joint ventures.
FRS 16
Property, Plant and Equipment
Revaluation method—proportionate restatement of
accumulated depreciation
FRS 24
Related Party Disclosures
Key management personnel
FRS 113
Fair Value Measurement
Scope of paragraph 52 (portfolio exception).
FRS 40
Investment Property
Clarifying the interrelationship between FRS 103 and FRS
40 when classifying property as investment property or
owner-occupied property
FRS 107
Financial Instruments: Disclosures
Servicing contracts.
