Connecting the nation. and Beyond. - ChartNexus

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.9 PROPERTY DEVELOPMENT ACTIVITIES (cont’d)
(b) Property development costs
Property development costs comprise costs associated with the acquisition of land or such portion thereof and all
costs directly attributable to development activities or that can be allocated on a reasonable basis to these activities.
Property development costs are transferred from land held for property development (Note 2.9(a)) when physical
development activities have commenced and can be completed within the Group’s and the Company’s normal
development cycle.
Property development costs are recognised when incurred.
When the outcome of the development activity can be estimated reliably, property development revenue and costs
are recognised as revenue and expenses respectively by reference to stage of completion of development activity at
reporting date. The stage of completion is measured by reference to the proportion that property development costs
incurred bear to the estimated total costs for the property development.
When the outcome of a development activity cannot be reliably estimated, property development revenue is recognised
only to the extent of property development costs incurred that is probable will be recoverable; property development
costs on the development units sold are recognised when incurred.
Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable
that total property development costs (including expected defect liability expenditure) will exceed total property
development revenue, the expected loss is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset and are stated at the lower of
cost and net realisable value.
Borrowing costs are capitalised in accordance with Note 2.22 to the financial statements.
Where revenue recognised in the profit or loss exceed billings to purchasers, the balance is shown as accrued billings
under trade and other receivables (within current assets). Where billings to purchasers exceed revenue recognised in the
profit or loss, the balance is shown as progress billings under trade and other payables (within current liabilities).
2.10 SERVICE CONCESSION ASSET
Where the Group provides construction services in exchange for the concession assets, the contract revenue is recognised
at its fair value using the percentage of completion method in accordance with the accounting policy stipulated in Note
2.13 Construction Contracts, with the corresponding entry recorded as Service Concession Asset (SCA) in the statement
of financial position. The SCA represents the Group’s rights (licence) to collect toll from users of the highway.
The SCA is amortised over the concession period. The amortisation formula applied in arriving at the annual amortisation
charge is as follows:
Cumulative traffic volume to-date
---------------------------------------------------------------------------------------- X SCA
Projected total traffic volume for the entire concession period
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Where an indication of impairment exists, the carrying amount of the SCA is assessed and written down immediately to
its recoverable amount. Refer to accounting policy on impairment of non-financial assets as set out in Note 2.21 to the
financial statements.