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Notes to the Consolidated Financial Statements

31st March 2018

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (Continued)

(b) (Continued)

HKFRS 15, “Revenue from Contracts with Customers”

Nature of change

The HKICPA has issued a new standard for the recognition of revenue. This will replace
HKAS 18 which covers contracts for goods and services and HKAS 11 which covers
construction contracts and the related literature.

The new standard is based on the principle that revenue is recognised when control of a
good or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for the
adoption.

Impact

Management has assessed the effects of applying the new standard on the Group’s
consolidated financial statements and has identified the following areas that are likely to be
affected:

• revenue from service – the application of HKFRS 15 may result in the identification of
separate performance obligations which could affect the timing of the recognition of
revenue;

• accounting for certain costs incurred in fulfilling a contract – certain costs which are
currently expensed may need to be recognised as an asset under HKFRS 15; and

• rights of return – HKFRS 15 requires separate presentation on the balance sheet of the
right to recover the goods from the customer and the refund obligation.

Based on the assessments undertaken up to date, the Group does not expect the new
standard to have any material impact on the Group’s consolidated financial statements.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2018 61