NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
69
CITIC ENVIROTECH LTD.
Annual
Report
2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.18 Revenue recognition (cont’d)
Rendering of technical services
Revenue from a contract to provide technical services is recognised when the outcome of the
contract can be estimated reliably, revenue and costs are recognised by reference to the stage of
completion of the contract activity at the end of each reporting period.
Environmental engineering contracts
Revenue from environmental engineering contracts are recognised when the outcome of the contract
can be estimated reliably, revenue and costs are recognised by reference to the stage of completion
of the contract activity at the end of each reporting period, as measured by the proportion that
contract costs incurred for work performed to date against the estimated total contract costs
and accepted by the customer, except where this would not be representative of the stage of
completion. Variations in contract work, claims and incentive payments are included to the extent
that they have been agreed with the customer.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is
recognised to the extent of contracts costs incurred that it is probable will be recoverable. Contract
costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is
recognised as an expense immediately.
Income from treatment of waste water
Income from treatment of waste water is recognised based on the volume of waste water treated
and are recognised when the services are rendered.
Interest income and finance income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that assets net carrying amount.
Finance income represents the interest income on the long term receivables recognised in respect
of the service concession arrangements in accordance with INT FRS 112
Service Concession
Arrangements
. Finance income is recognised in profit or loss using the effective interest method.
Commission income
Commission income is recognised when the services are rendered.
2.19 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
