TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
56
Notes to the financial statements
For the financial year ended 31 March 2016
2.
Summary of significant accounting policies (cont’d)
2.19
Financial guarantee
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt
instrument.
Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as
income in profit or loss over the period of the guarantee. If it is probable that the liability will be higher than the amount
initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to profit or
loss.
2.20
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duty.
(a)
Sale of food and beverages
Revenue from sale of food and beverages is recognised upon the transfer of significant risk and rewards of
ownership of the goods to the customer, usually on delivery of the food and beverages. Revenue is not
recognised to the extent where there are significant uncertainties regarding recovery of the consideration due,
associated costs or the possible return of goods.
(b)
Service charges
Revenue from service charges is recognised when the services are rendered.
(c)
Service income
Revenue from service contracts is recognised when the service is provided in accordance with the substance of
the relevant agreement.
(d)
Management fees
Revenue from management contracts is recognised over the management period on a straight-line basis.
(e)
Interest income
Interest income is accrued on a time proportionate basis, by reference to the principal outstanding and at the
effective interest rate applicable.
(f)
Dividend income
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been
established.
