Pg 147 - Berjaya Corporation Berhad

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Berjaya Land Berhad (201765-A) 50 Annual Report 2005 Notes To The Financial Statements 30 April 2005 2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (d) Property, Plant and Equipment and Depreciation (Cont’d) The annual rates used are: % Buildings 1.25 - 2.5 Short leasehold hotel properties Over 50 years Plant and equipment 10 - 33 Computer equipment 10 - 50 Renovation 10 - 25 Furniture and fittings 5 - 25 Office equipment 5 - 25 Motor vehicles 20 - 25 Aircraft 6.67 Golf course development expenditure 1.00 - 1.75 Others 10 - 25 Depreciation on assets under construction commences when the assets are ready for their intended use. Others comprise mainly linen, silverware, cutleries, kitchen utensils and recreational livestocks and apparatus. (e) (f) Investment Properties Investment properties consist of land and buildings held for their investment potential and rental income. Investment properties are stated at cost less impairment losses and not subject to depreciation. Land Held for Development and Property Development Costs (i) Land held for development Land held for development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses. Freehold land is not amortised. Short term leasehold land is amortised on a straight-line basis over the remaining period of the lease of 15 years. Land held for property development is reclassified as property development costs at the point when development activities have been commenced and where it can be demonstrated that the development cycle can be completed within the normal operating cycle. (ii) Property development costs Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. When the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised to the extent of property development costs incurred that is probable of being recovered, and property development costs on properties sold are recognised as an expense in the period in which they are incurred. Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately. Property development costs that are not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.
Berjaya Land Berhad (201765-A) Annual Report 2005 51 2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (f) Land Held for Development and Property Development Costs (Cont’d) (ii) Property development costs (Cont’d) The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings within receivables and the excess of billings to purchasers over revenue recognition in the income statement is classified as progress billings within payables. The adoption of MASB 32: Property Development Activities has not given rise to any adjustments to the opening balances of retained profits of the prior and current years. Comparatives, however, have been restated, as disclosed in Note 42 to the financial statements to conform to changes in presentation required by MASB 32 that have been applied retrospectively. (g) Investments in Subsidiary and Associated Companies The Company’s investments in subsidiary and associated companies are stated at cost less impairment losses. (h) Intangible Assets Goodwill on consolidation represents the difference between the purchase price over the fair value of the net assets of the investment in subsidiary and associated companies at the date of acquisition less proportionate amounts written off for subsequent disposals of these investments. Positive goodwill is retained in the consolidated balance sheet at cost less impairment losses. Negative goodwill is shown as a deduction from the positive goodwill on consolidation of the Group. Goodwill arising on the acquisition of subsidiary companies is presented separately in the balance sheet while goodwill arising on the acquisition of associated companies and jointly controlled entities is included within the carrying amount of investments in associated companies and investments in jointly controlled entities respectively. Goodwill or negative goodwill is not amortised. Goodwill is reviewed at each balance sheet date and will be written down for impairment when it is considered necessary. (i) Inventories Inventories comprise stores and consumables which are stated at the lower of cost and net realisable value. Cost is determined on a first-in-first-out basis. Property inventories are stated at the lower of cost and net realisable value. Cost includes the relevant cost of land, development expenditure and related interest cost incurred during the development period. Net realisable value represents the estimated selling price less all estimated costs to be incurred in marketing, selling and distribution. (j) Leases (i) Finance leases and hire purchase arrangements Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment loss. The corresponding liability is included in the balance sheet as liabilities. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practical to determine; otherwise, the Company’s incremental borrowing rate is used. Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. The depreciation policy for leased assets is similar with that for depreciable property, plant and equipment as described in Note 2(d). (ii) Operating leases Operating leases are leases other than finance lease. Lease rental under operating lease is charged to income statement on a straight-line basis over the term of the relevant lease.
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Pg 147 - Berjaya Corporation Berhad

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