ANNUAL REPORT 2014
59
NOTES TO THE
FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(g) Investment properties
(i)
Investment properties carried at fair value
Investment properties are properties which are owned or held under leasehold interest to earn rental
income or for capital appreciation or for both but not for sale in the ordinary course of business, use
in the production or supply of goods or services or for administrative purposes. These include land
held for a currently undetermined future use. Properties that are occupied by the companies in the
Group are accounted for as owner-occupied rather than as investment properties.
The Group has changed its accounting policy in respect to accounting for investment property during
the financial year. In the previous year, investment properties are measured subsequently at cost less
depreciation/impairment loss.
In the current year, investment properties are measured initially at cost and subsequently at fair
value with any change therein recognised in profit or loss for the period in which they arise. Where
the fair value of the investment property under construction is not reliably determinable, the
investment property under construction is measured at cost until either its fair value becomes reliably
determinable or construction is complete, whichever is earlier. The change in accounting policy has
been made retrospectively and the effects from the change are disclosed in Note 37.
Cost includes expenditure that is directly attributable to the acquisition of the investment property.
The cost of self-constructed investment property includes the cost of the materials and direct labour,
any other costs directly attributable to bringing the investment property to a working condition for
their intended use and capitalised borrowing costs.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from
use and no future economic benefits are expected from its disposal. The difference between the net
disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the
item is derecognised.
(ii) Reclassification to/from investment property
When an item of property, plant and equipment is transferred to investment property following a
change in its use, any difference arising at the date of transfer between the carrying amount of the
item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of
property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the
gain is recognised in profit or loss. Upon disposal of an investment property, any surplus previously
recorded in equity is transferred to retained earnings; the transfer is not made through profit or loss.
When the use of a property changes such that it is reclassified as property, plant and equipment, its
fair value at the date of reclassification becomes its cost for subsequent accounting.
(h) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is calculated using the weighted average cost formula, and includes expenditure
incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing
them to their existing location and condition. In the case of work-in-progress and manufactured inventories,
cost includes an appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary to make the sale.
