Page 90 - Neal and Massy Holdings Annual Report 2012

88 2012
NOTES TO THE Consolidated FINANCIAL STATEMENTS
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 Summary Of Significant Accounting Policies (continued)
2.11 Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined using the first-in, first-out (‘FIFO’) or the
weighted average cost method. The cost of finished goods and work in progress comprise raw materials, direct labour, other
direct costs and related production overheads, but excludes interest expense. Net realisable value is the estimate of the selling
price in the ordinary course of business, less the costs of completion and selling expenses.
2.12 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment.
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course
of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are
classified as current assets. If not, they are presented as non-current assets.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of
the provision is recognised in the consolidated income statement within ‘selling, general and administrative expenses’.
2.13 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the
consolidated statement of financial position, bank overdrafts are shown within borrowings in current liabilities.
2.14 Share capital and reserves
Ordinary shares with discretionary dividends are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity
holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity
attributable to the company’s equity holders.