Mandarin Oriental International Limited - Mandarin Oriental Hotel ...
Mandarin Oriental International Limited - Mandarin Oriental Hotel ...
Mandarin Oriental International Limited - Mandarin Oriental Hotel ...
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Principal Accounting Policies Continued<br />
I Other investments<br />
Other investments are non-financial assets and are stated at cost less provision for impairment.<br />
J Stocks<br />
Stocks, which principally comprise beverages and consumables, are stated at the lower of cost and net realizable<br />
value. Cost is determined by the first-in, first-out method.<br />
K Debtors<br />
Debtors are measured at amortized cost using the effective interest method. Provision for impairment is<br />
established when there is objective evidence that the outstanding amounts will not be collected. Significant<br />
financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization,<br />
and default or delinquency in payments are considered indicators that the debtor is impaired. The carrying<br />
amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized<br />
in arriving at operating profit. When a debtor is uncollectible, it is written off against the allowance account.<br />
Subsequent recoveries of amount previously written off are credited in the profit and loss account. Debtors with<br />
maturities greater than twelve months after the balance sheet date are classified under non-current assets.<br />
L Cash and cash equivalents<br />
For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks and financial<br />
institutions and bank and cash balances, net of bank overdrafts. In the balance sheet, bank overdrafts are included<br />
in current borrowings.<br />
M Provisions<br />
Provisions are recognized when the Group has present legal or constructive obligations as a result of past events,<br />
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations,<br />
and a reliable estimate of the amount of the obligations can be made.<br />
N Borrowings and borrowing costs<br />
Borrowings are initially recognized at fair value, net of transaction costs incurred. In subsequent periods,<br />
borrowings are stated at amortized cost using the effective interest method.<br />
Borrowing costs relating to major development projects are capitalized until the asset is substantially completed.<br />
Capitalized borrowing costs are included as part of the cost of the asset. All other borrowing costs are expensed<br />
as incurred.<br />
Borrowings are classified under non-current liabilities unless their maturities are within twelve months after the<br />
balance sheet date.<br />
O Government grants<br />
Grants from governments are recognized at their fair value when there is reasonable assurance that the grant will<br />
be received and the Group will comply with all attached conditions.<br />
Grants relating to the development of hotel property are deducted in arriving at the carrying amount of the hotel<br />
property.<br />
36 <strong>Mandarin</strong> <strong>Oriental</strong> <strong>International</strong> <strong>Limited</strong>