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NOTES TO THE FINANCIAL STATEMENTS
31 March 2010
TEXWINCA HOLDINGS LIMITED ANNUAL REPORT 2010
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Operating leases
Leases where substantially all the rewards and risks of
ownership of assets remain with the lessor are accounted
for as operating leases. Where the Group is the lessor,
assets leased by the Group under operating leases are
included in non-current assets, and rentals receivable
under the operating leases are credited to the income
statement on the straight-line basis over the lease terms.
Where the Group is the lessee, rentals payable under the
operating leases are charged to the income statement on
the straight-line basis over the lease terms.
Prepaid land lease payments under operating leases are
initially stated at cost and subsequently recognised on the
straight-line basis over the lease terms. When the lease
payments cannot be allocated reliably between the land
and buildings elements, the entire lease payments are
included in the cost of the land and buildings as a finance
lease in property, plant and equipment.
Inventories
Inventories are stated at the lower of cost and net
realisable value. For fabric and yarn, cost is determined
on a weighted average basis and, for work in progress
and finished goods, cost comprises direct materials,
direct labour and an appropriate proportion of overheads.
For casual apparel and accessory, cost is determined
on a weighted average basis and includes all costs
of purchases and other costs incurred in bringing the
inventories to their present location and condition. Net
realisable value is based on estimated selling prices less
further costs expected to be incurred to completion and
disposal or to make the sale.
Derivative financial instruments
The Group uses derivative financial instruments to
hedge its foreign currency risk. Such derivative financial
instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are
carried as assets when the fair value is positive and as
liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value of
derivatives are taken directly to the income statement.
2.4
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