for the year ended 31 December 2016
NOTES TO THE
FINANCIAL STATEMENTS
Baker Technology Limited
-
97
-
2.
Summaryofsignificantaccountingpolicies (cont’d)
2.14
Financial guarantee
A financial guarantee contract is a contract that requires the issuer tomake specifiedpayments to reimburse the
holder for a loss it incurs because a specified debtor fails tomake payment when due in accordance with the
terms of adebt instrument.
Financial guarantees are recognised initially 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 theprofit or loss over theperiodof theguarantee. If it is probable that the liabilitywill
be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount
with the difference charged to the profit or loss.
2.15
Employee benefits
(a)
Defined contribution plan
The Group participates in the national pension schemes as defined by the laws of the countries in
which it has operations. Inparticular, theSingapore companies in theGroupmake contributions to the
Central Provident Fund scheme inSingapore, adefinedcontributionpension scheme.Contributions to
a defined contributionpension scheme are recognised as an expense in the period inwhich the related
service is performed.
(b)
Employee leave entitlement
Employee entitlements to annual leave are recognised as a liability when they are accrued to the
employees. The estimated liability for leave is recognised for services rendered by employees up to
the end of the reporting period.
2.16
Leases
Thedeterminationofwhetheranarrangement is,orcontainsa lease isbasedon thesubstanceof thearrangement
at inceptiondate:whether fulfilment of thearrangement isdependent on theuseof a specificasset or assets, or
thearrangement conveys a right touse theasset, even if that right isnot explicitly specified inanarrangement.
As lessee
Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over lease
term.The aggregatebenefit of incentives providedby the lessor is recognised as a reductionof rental expense
over the lease term on a straight line basis.
