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92
WCT Berhad (66538-K)
annual report 2011
NOTES TO THE FINANCIAL STATEMENTS
31 December 2011
cont’d
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.8 Investment properties cont’d
Investment properties are derecognised when either they have been disposed of or when the investment property
is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss
on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or
disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from
investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at
the date of change in use. For a transfer from owner-occupied property to investment property, the property is
accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.7 up
to the date of change in use.
Investment property under construction ("IPUC") is measured at fair value (when the fair value is reliably
determinable). When assessing whether the fair value of IPUC can be determined reliably the Company considers,
among other things:
1. Construction of the asset in a developed liquid market.
2. Signing of a construction contract with the contractor.
3. Obtaining the required building and letting permits.
4. The percentage of rentable area that has been pre-leased to tenants.
IPUC for which fair value cannot be determined reliably is measured at cost less impairment.
The fair value of IPUC were determined at the end of the reporting period based on the opinion of a qualified
independent valuer and valuations were performed using either the residual method approach or disclosed cash
flow approach, as deemed appropriate by the valuer. Each IPUC is individually assessed.
The estimated value of future assets is based on the expected future income from the project, using risk adjusted
yields that are higher than the current yields of similar completed property. The remaining expected costs of
completion plus margin are deducted from the estimated future assets value.
2.9 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an
estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For
the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units (“CGU”)).