Pg 147 - Berjaya Corporation Berhad

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.