SEC Form 17-A: Annual Report - the solid group inc website

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In 2012, construction in progress pertains to the ongoing construction of a hotel of SMC to
be named Green Sun Hotel. Also, the costs incurred for the acquisition of furniture and
fixtures and machinery and equipment which are not yet available for use and the on-going
improvements are recorded as construction in progress.
Also in 2012, SBC reversed the allowance for impairment provided against its cable system,
following the sale of its assets used in business operations (see Note 1.3). The reversal
amounted to P350.0 million and is presented as part of Other Operating Income in the 2012
consolidated statement of income (see Note 19.1).
No additional impairment losses were recognized in 2012, 2011 and 2010 based on
management’s assessment. Based on a recent report of independent appraisers as of
December 31, 2012, the fair values of the Group’s land and building and improvements
amounted to P203.5 million.
The amount of depreciation and amortization computed on property, plant and equipment is
presented as follows:
Notes 2012 2011 2010
Cost of services 18.2 P 29,405,353 P 63,913,859 P 61,817,018
Cost of rentals 3,428,898 4,119,796 -
General and administrative
expenses 13,632,969 9,439,774 10,438,234
Discontinued operations - 699,821 3,333,724
20 P 46,467,220 P 78,173,250 P 75,588,976
There were no restrictions on titles and items of property, plant and equipment since there
were no items of property, plant and equipment pledged as security as of December 31, 2012
and 2011.
Fully depreciated property, plant and equipment still in use in the Group’s operations
amounted to P109.9 million and P106.4 million as of December 31, 2012 and 2011,
respectively.
13. INVESTMENT PROPERTY
The Group’s investment property, which are accounted for under the fair value method,
consists mainly of land and improvements, and buildings and improvements under operating
lease agreements. These properties earn rental income, presented as Rentals in the
consolidated statements of income. Direct costs such as real property taxes, repairs and
maintenance and utilities are presented as part of Cost of Rentals in the consolidated
statements of income (see Note 18.3).
The fair values of the Group’s investment property as of December 31, 2012, 2011 and 2010
were determined based on appraisal reports dated February 5, 2013, February 29, 2012 and
January 4, 2011, respectively. Management obtains annual appraisal reports on its investment
property from independent appraisers.