64
GDS Global Limited Annual Report 2015
NOTES TO
FINANCIAL STATEMENTS
As at 30 September 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
PROVISIONS - Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash
flows.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
GOVERNMENT GRANTS - Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attaching to them and the grants will
be received. The benefit of a government loan at a below-market rate of interest is treated as a
government grant, measured as the difference between proceeds received and the fair value of
the loan based on prevailing market interest rates. Government grants whose primary condition is
that the Group should purchase, construct or otherwise acquire non-current assets are recognised
as deferred income in the statement of financial position and transferred to profit or loss on a
systematic and rational basis over the useful lives of the related assets.
Other government grants are recognised as income over the periods necessary to match them with
the costs for which they are intended to compensate, on a systematic basis. Government grants
that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Group with no future related costs are recognised in
profit or loss in the period in which they become receivable.
REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received
or receivable. Revenue is reduced for estimated customer returns, rebates and other similar
allowances.
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
The Group has transferred to the buyer the significant risks and rewards of ownership of the
goods;
The Group retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the
Group; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
