87
87
2015/2016 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 March 2016
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(y) New accounting standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual
periods beginning after 1April 2015, and have not been applied in preparing these financial statements.
These new standards include, among others, FRS 115
Revenue from Contracts with Customers
and
FRS 109
Financial Instruments
which are mandatory for adoption by the Group on 1 April 2018.
● FRS 115
Revenue from Contracts with Customers
FRS 115 establishes a comprehensive framework for determining whether, how much and when
revenue is recognised. It also introduces new cost guidance which requires certain costs of
obtaining and fulfilling contracts to be recognised as separate assets when specified criteria are
met. When effective, FRS 115 replaces existing revenue recognition guidance, including FRS 18
Revenue
.
● FRS 109
Financial Instruments
FRS 109 replaces most of the existing guidance in FRS 39
Financial Instruments: Recognition
and Measurement.
It includes revised guidance on classification and measurement of financial
instruments, a new expected credit loss model for calculating impairment on financial assets, and
new general hedge accounting requirements.
As FRS 115 and FRS 109, when effective, will change the existing accounting standards and guidance
applied by the Group and the Company in accounting for revenue and financial instruments, these
standards are expected to be relevant to the Group and the Company. The Group is currently
assessing the potential impact upon adoption of these standards and the Group does not plan to adopt
these standards early.
(z) Restatement of comparatives
The Group had previously recorded its ship owning revenue based on actual daily charter income in
accordance with the terms of the charter hire agreements. This was the approach consistently adopted
by the Group up to the financial year ended 31 March 2015.
During the financial year, the Group was strongly advised that it is more appropriate to adopt straight-
line revenue recognition over the entire charter period. FRS17
Leases
prescribes that lease income
from operating leases shall be recognised in income on a straight-line basis over the lease term,
unless another systematic basis is more representative of the time pattern in which use benefit derived
from the leased asset is diminished. The Group was advised by its auditors this year that the relevant
benefit is the availability of the vessel for use by the charterer. The Group’s commitment is to avail its
vessels to its charterers which remains unchanged over the charter hire period.
