Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

Principal Accounting Policies
A Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards,
including International Accounting Standards and Interpretations adopted by the International Accounting
Standards Board. The financial statements have been prepared under the historical cost convention except as
disclosed in the accounting policies below.
i) Interpretations effective in 2008 which are relevant to the Group’s operations
IFRIC 11 ‘IFRS 2 – Group and Treasury Share Transactions’ provides guidance on whether share-based
payment transactions involving treasury shares or involving entities within a group should be accounted for
as equity-settled or cash-settled share-based transactions in the separate financial statements of the entities.
IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction’ provides guidance on assessing the limit in IAS 19 on the amount of surplus that can be recognized
as an asset under a defined benefit plan. It also explains how the pension asset or liability may be affected by a
statutory or contractual minimum funding requirement.
The adoption of the above interpretations did not have a material impact on the Group’s financial statements.
ii) Standards, amendments and interpretations effective after 2008 which are relevant to the Group’s
operations but will have no material impact on the Group’s accounting policies
IAS 23 ‘Borrowing Costs’ (effective from 1st January 2009) supersedes IAS 23 (as revised in 1993) and requires
the capitalization of borrowing costs relating to qualifying assets.
Amendments to IFRS 2 ‘Vesting Conditions and Cancellations’ (effective from 1st January 2009) restrict
vesting conditions to service conditions and performance conditions, and specify that a failure to meet a
non-vesting condition, whether by the entity or by the counterparty, should be treated as a cancellation.
IAS 16 (Amendment) ‘Property, Plant and Equipment’ and the consequential amendment to IAS 7 ‘Statement
of Cash Flows’ (effective from 1st January 2009) is part of the 2008 improvement project. It specifies that
entities whose ordinary activities include renting and subsequently selling the same items of property, plant
and equipment should recognize revenue from both renting and selling the assets. The cash flows arising from
purchase, rental and sale of those assets are classified as cash flows from operating activities.
IAS 19 (Amendment) ‘Employee Benefits’ (effective from 1st January 2009) is part of the 2008 improvement
project. It clarifies the distinction between curtailments and negative past service costs under a defined
benefit plan.
IAS 38 (Amendment) ‘Intangible Assets’ (effective from 1st January 2009) is part of the 2008 improvement
project. It clarifies that expenditure on advertising and other promotional activities must be recognized in
the period in which the entity obtains the right to access the advertising or promotional material.
Amendment to IAS 39 ‘Eligible Hedged Items’ (effective from 1st July 2009) clarifies how the principles
that determine whether a hedged risk or portion of cash flows is eligible for designation should be applied
in particular situations.
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’ (effective from 1st October 2008) addresses
the nature of the hedged risk and amount of the hedged item for which a hedging relationship may be
designated in the consolidated financial statements of a parent entity.
Annual Report 2008 31