210
PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.16 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other
components. All operating segments’ results are reviewed regularly by the Group’s Chief Executive Officer (“CEO”) who is
responsible for making decisions about resources to be allocated to the segment and assess its performance, and for
which discrete financial information is available.
Segment results that are reported to the Group’s CEO include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s
headquarters), head office expenses, and tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire investment properties and properties
under development.
3.17 Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
3.18 New standards and interpretations not adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2014, and have not been applied in preparing these financial statements. The Group is currently assessing the
potential impact of adopting these new standards and interpretations, on the financial statements of the Group.
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 January 2018.
• 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 11
Construction Contracts
, INT FRS 113
Customer
Loyalty Programmes
, INT FRS 115
Agreements for the Construction of Real Estate
, INT FRS 118
Transfers of Assets
from Customers
and INT FRS 31
Revenue – Barter Transactions Involving Advertising Services
.
• 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 in accounting for revenue and financial instruments, these standards are expected to be relevant to the Group.
In addition, Singapore-incorporated companies listed on the Singapore Exchange (“SGX”) will apply a new financial
reporting framework identical to the International Financial Reporting Standards (“IFRS”) for financial year ending
31 December 2018 onwards. Singapore-incorporated companies listed on SGX will have to assess the impact of IFRS 1:
First-time adoption of IFRS
when transitioning to the new reporting framework.
The Group does not plan to adopt these standards early and is currently assessing the potential impact of adopting these
new standards and interpretations, on the financial statements of the Group and the Company.
