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NOTES TO THE FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
2.4 Debt securities at fair value through the income and expenditure account
The Foundation classifies its investments as debt securities at fair value through the income and expenditure account. The
classification depends on the purpose for which the financial assets were acquired. Management determines the classification
of its financial assets at initial recognition and re-evaluates this designation at every reporting date.
A financial asset is classified as a debt security if acquired principally for the purpose of selling in the short term or if so
designated by management. Assets in this category are classified as current assets if they are either held for trading or are
expected to be realised within 12 months of the balance sheet date.
Regular purchases and sales of debt securities are recognised on trade-date – the date on which the Foundation commits to
purchase or sell the asset. Such debt securities are initially recognised at fair value and transaction costs are expensed in the
income and expenditure account. Debt securities are derecognised when the rights to receive cash flows from the investments
have expired or have been transferred and the Foundation has transferred substantially all risks and rewards of ownership.
The fair values of quoted financial assets are based on current bid prices. For unlisted securities without an active market,
the Foundation establishes the fair value by using valuation techniques including the use of recent arm’s length transactions,
reference to other information that are substantially the same.
2.5 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
2.6 Donations receivable
Donations receivable are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. A provision for impairment is established when there is objective evidence
that the Foundation will not be able to collect all amounts due according to the original terms. The amount of the provision
is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
effective interest rate. The amount of the provision is recognised in the income and expenditure account.
2.7 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
2.8 Provisions
Provisions are recognised when the Foundation has a present legal or constructive obligation as a result of past events; it is more
likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
2.9 Revenue recognition
Provided it is probable that the economic benefits will flow to the Foundation and the revenue and costs, if applicable, can be
measured reliably, revenue is recognised in the income and expenditure account as follows:
(a)
(b)
Donations
Donations are accounted for in the income and expenditure account when received and receivable.
Interest income
Interest income from bank deposits and securities is accrued on a time-apportioned basis by reference to the principal
outstanding and the rate applicable.
Ocean Park Conservation Foundation, Hong Kong Annual Report 2008-2009 59