Annual Report 2011 - Goodbaby International Holdings Limited

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NOTES TO FINANCIAL STATEMENTS 31 December <strong>2011</strong> 3.2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Intangible assets (other than goodwill) (Continued) Research and development costs All research costs are charged to the statement of comprehensive income as incurred. Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred. Deferred development costs are stated at cost less any impairment losses and are amortised using the straight-line basis over the commercial lives of the underlying products, commencing from the date when the products are put into commercial production. 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 statement of comprehensive income on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under operating leases net of any incentives received from the lessor are charged to the statement of comprehensive income 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. Investments and other financial assets Initial recognition and measurement Financial assets within the scope of IAS 39 of the Group are classified as loans and receivables, as appropriate. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss. The Group’s financial assets include cash and cash equivalents, trade and notes receivables, other receivables and amounts due from related parties. gb international
NOTES TO FINANCIAL STATEMENTS 31 December <strong>2011</strong> 3.2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments and other financial assets (Continued) Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of sale in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in other income and gains or finance costs in the income statement. These net fair value changes do not include any dividends or interest earned on these financial assets, which are recognised in accordance with the policies set out for “Revenue recognition” below. Financial assets designated upon initial recognition at fair value through profit or loss are designated at the date of initial recognition and only if the criteria under IAS 39 are satisfied. The Group evaluates its financial assets at fair value through profit or loss (held for trading) to assess whether the intent to sell them in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets and management’s intent to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets. The reclassification from financial assets at fair value through profit or loss to loans and receivables, available-for-sale financial assets or held-tomaturity investments depends on the nature of the assets. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation as these instruments cannot be reclassified after initial recognition. Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required. / 85
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CORPORATE INFORMATION gb internatio
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CORPORATE INFORMATION DIRECTORS Exe
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7 Chairman’s Statement
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Dear Shareholders, I wish to presen
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Looking forward, the Group will con
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OVERVIEW For the financial year end
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) Our OBM model was systematically
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FINANCIAL REVIEW — CONTINUING OPE
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Cost of Sales, Gross Profit and Gro
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Income Tax Expense Our income tax e
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Pledge of Assets As at 31 December
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Page 42 and 43: The Board is pleased to present thi
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Page 67 and 68: CONSOLIDATED STATEMENT OF COMPREHEN
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NOTES TO FINANCIAL STATEMENTS 31 De
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FINANCIAL SUMMARY ASSETS, LIABILITI
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Annual Report 2011 - Goodbaby International Holdings Limited

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