LensCrafters 2011 Annual Report Download - page 194

ANNUAL REPORT 2011> 118 |
Group has no further payment obligations once the contributions have been paid. The
contributions are recognized as employee benefits expenses when they are due. Prepaid
contributions are recognized as an asset to the extent that a cash refund or a reduction in
future payments is available.
Provisions for risks
Provisions for risks are recognized when:
• the Group has a present obligation, legal or constructive, as a result of a past event;
• it is probable that the outflow of resources will be required; and
• the amount of the obligation can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required
to settle the obligation using a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the obligation. The increase in the provision
due to passage of time is recognized as interest expense.
Share-based payments
The Company operates a number of equity-settled, share-based compensation plans,
under which the entity receives services from employees as consideration for equity
instruments (options). The fair value of the employee services received in exchange for
the grant of the options is recognized as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted.
The total expense is recognized over the vesting period, which is the period over which all
of the specified vesting conditions are to be satisfied. At the end of each reporting period,
the Company revises its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognizes the impact of the revision to
original estimates, if any, in the consolidated statement of income, with a corresponding
adjustment to equity.
Recognition of revenues
Revenue is recognized in accordance with IAS 18 – Revenue. Revenue includes sales of
merchandise (both wholesale and retail), insurance and administrative fees associated with
the Group’s managed vision care business, eye exams and related professional services,
and sales of merchandise to franchisees along with other revenues from franchisees such
as royalties based on sales and initial franchise fee revenues.
Wholesale Division revenues are recognized from sales of products at the time of shipment,
as title and the risks and rewards of ownership of the goods are assumed by the customer
at such time. The products are not subject to formal customer acceptance provisions.
In some countries, the customer has the right to return products for a limited period of
time after the sale. However, such right of return does not impact the timing of revenue
recognition. Accordingly, the Group records an accrual for the estimated amounts to
be returned. This estimate is based on the Group’s right of return policies and practices
along with historical data and sales trends. There are no other post-shipment obligations.