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Notes to the Consolidated Financial Statements
31st March 2017
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.22 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result
of past events; it is probable that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required
in settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognised as interest expense.
2.23 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the Group’s activities. Revenue is shown net of value
added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group
recognises revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and when specific criteria have been met for each of
the Group’s activities as described below:
(i) Sales of goods are recognised when a group entity has delivered products to the customer,
the customer has accepted the products and collectability of the related receivables is
reasonably assured.
(ii) Rental income is recognised on a straight-line basis over the periods of the respective leases.
(iii) Interest income is recognised on a time-proportion basis using the effective interest method.
When a receivable is impaired, the Group reduces the carrying amount to its recoverable
amount, being the estimated future cash flow discounted at the original effective interest rate
of the instrument, and continues unwinding the discount as interest income.
68 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017