Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

I Other investments
Other investments are non-financial assets and are stated at cost less provision for impairment.
J Development costs
Costs directly attributable to development projects, including borrowing costs, are capitalized to the extent
that such expenditure is expected to generate future economic benefits and upon completion of the project
are included in non-current assets.
K Stocks
Stocks, which comprise beverages and consumables, are stated at the lower of cost or net realizable value. Cost
is determined by the first-in, first-out method.
L Debtors
Debtors are carried at anticipated realizable value.An estimate is made for doubtful debts based on a review of all
outstanding amounts at the year end. Bad debts are written off during the year in which they are identified.
M Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks and
financial institutions and bank and cash balances, net of bank overdrafts. In the balance sheet, bank overdrafts
are included in current borrowings.
N Provisions
Provisions are recognized when the Group has present legal or constructive obligations as a result of past
events, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligations, and a reliable estimate of the amount of the obligations can be made.
O Borrowings and borrowing costs
Borrowings are initially recognized at fair value, net of transaction costs incurred. In subsequent periods,
borrowings are stated at amortized cost using the effective yield method.
Borrowings are classified under non-current liabilities unless their maturities are within twelve months after
the balance sheet date.
Borrowing costs relating to major development projects are capitalized until the asset is substantially completed.
Capitalized borrowing costs are included as part of the cost of the asset.All other borrowing costs are expensed
as incurred.
P Government grants
Grants from governments are recognized at their fair value when there is reasonable assurance that the grant
will be received and the Group will comply with all attached conditions.
Grants relating to the development of hotel property are deducted in arriving at the carrying amount of the
hotel property.
ANNUAL REPORT 2005 35