Annual Report 2005 - Leeden Limited

Notes to the Financial Statements- 31 December 2005392.8 Functional and foreign currencies (cont’d)Goodwill and fair value adjustments which arose on acquisition of foreign subsidiaries before 1 January 2005 are deemed to beassets and liabilities of the parent company and are recorded in SGD at the rates prevailing at the date of acquisition.On disposal of a foreign entity, accumulated exchange differences are recognised in the profi t and loss account as a componentof the gain or loss on disposal.2.9 Development propertyDevelopment property consists of property which is held with the intention of development and sale in the ordinary course ofbusiness.ACE DYNAMICS LIMITEDIt is stated at the lower of cost plus attributable profi t less progress billings, and estimated net realisable value. Net realisable valuerepresents the estimated selling price less cost to be incurred in selling the property.Cost of properties under development include land acquisition costs, development expenditure, borrowing costs and other relatedexpenditure. Borrowing costs payable on loans funding a development property are capitalised as a cost of the development propertyuntil the date of its practical completion, which is taken to be the date of issue of the Temporary Occupation Permit (“TOP”).Revenue and costs associated with the development property are recognised as revenue and expenses respectively, by reference tothe stage of completion of the development property at the balance sheet date, when the outcome of the project can be estimatedreliably. The stage of completion is measured by reference to actual contract costs incurred to date as a percentage of total estimatedcontract costs, costs in both cases exclude land and interest costs.When it is probable that total development costs will exceed total revenue of the project, provision for expected loss is recognised asan expense immediately.The development property will be transferred to development property completed for sale when it has been completed, the TOP hasbeen obtained and it is available for sale.2.10 Development property completed for saleDevelopment property completed for sale is stated at the lower of cost (Note 2.9) and estimated net realisable value. Net realisablevalue represents the estimated selling price less costs to be incurred in selling the property.2.11 Property, plant and equipmentAll items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipmentare stated at cost or valuation less accumulated depreciation and any accumulated impairment losses. Land and buildings aresubsequently revalued on an asset-by-asset basis, to their fair values. Fair value is determined from market-based evidence byappraisal that is undertaken by professionally qualifi ed valuers.When an asset is revalued, any increase in the carrying amount is credited directly to the asset revaluation reserve. However, theincrease is recognised in the profi t and loss account to the extent that it reverses a revaluation decrease of the same asset previouslyrecognised in the profi t and loss account. When an asset’s carrying amount is decreased as a result of a revaluation, the decreaseis recognised in the profi t and loss account. However, the decrease is debited directly to the asset revaluation reserve to the extentof any credit balance existing in the reserve in respect of that asset.Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the netamount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respectof an asset, is transferred directly to accumulated profi ts on retirement or disposal of the asset.The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicatethat the carrying value may not be recoverable.ANNUAL REPORT 2005