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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(i) Impairment of assets
Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for impairment losses
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss
is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Recoverable
amount is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest level for which there are separately identifiable cash flows.
The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged
to the revaluation reserves. Any subsequent increase in recoverable amount is recognised in the income statement unless
it reverses an impairment loss on a revalued asset in which case it is credited to revaluation reserves.
(j) Trade receivables
Trade receivables are carried at invoiced amount less an allowance for doubtful debts. The allowance is established when
there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables.
Trade receivables arising from the sale of completed properties under instalment schemes are recorded at their fair values,
which are determined by discounting all future receipts using an imputed rate of interest.
(k) Income taxes
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
Current tax expense is determined according to the tax law of the jurisdiction in which the Group operates. It includes all
taxes chargeable upon the taxable profits, and real property gains tax payable on disposal of properties.
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts
attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences or unused tax losses can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiary companies and associated
companies except where the timing of reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
Tax rates enacted or substantively enacted by the balance sheet date are used to determine the deferred tax.
(l) Land held for property development
for the financial year ended 31 December 2005
Land held for property development consists of land upon which no significant development work has been undertaken or
where development activities are not expected to be completed within the normal operating cycle. Such land is classified
as non-current asset and is stated at cost less accumulated impairment losses.
Cost of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other
relevant levies. Where the Group had previously recorded the land at revalued amount, it continues to retain this amount
as its surrogate cost as allowed by FRS 201 2004 “Property Development Activities” (formerly known as MASB 32). Where
an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its
recoverable amount. See accounting policy Note 2(i) on impairment of assets.
Land held for property development is transferred to “Property development costs” (under current assets) upon
commencement of development activities and where the development activities can be completed within the Group’s
normal operating cycle.