Sun Art Retail Group Limited - TodayIR.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h)
Investment properties
Areas within hypermarket buildings owned by the Group which are held to earn rental income
and/or for capital appreciation are classified as investment properties. Investment properties
are stated at cost less accumulated depreciation and impairment losses (see note 1(l)).
Depreciation is calculated to write off the cost of investment properties, less their estimated
realisable value, if any, using the straight line method over the estimated useful life of 10-30
years. Depreciation methods, useful lives and residual values are reviewed at each financial
year-end and adjusted if appropriate.
Areas within hypermarket buildings leased by the Group which are sublet to earn rental
income are classified as other property, plant and equipment (see note 1(i)).
(i)
Other property, plant and equipment
(i)
Owned assets
Buildings held for own use which are situated on land held under land use rights and
other property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses (see note 1(l)).
The cost of self-constructed items of property, plant and equipment includes the cost of
materials, direct labour, the initial estimate, where relevant, of the costs of dismantling
and removing the items and restoring the site on which they are located, and
capitalised borrowing costs (see note 1(x)). Construction in progress is transferred to
investment properties or the relevant categories of other property, plant and equipment
when substantially all of the activities necessary to prepare the assets for their intended
use are complete, notwithstanding any delays in the issue of the relevant completion
certificates by the relevant PRC authorities. Purchased software that is integral to the
functionality of related equipment is capitalised as part of that equipment.
The cost of replacing a part of an item of property, plant and equipment is recognised
in the carrying amount of the item if it is probable that the future economic benefits
embodied within the part will flow to the Group, and its cost can be measured reliably.
The carrying amount of the replaced part is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit or loss as incurred.
Gains or losses arising from the retirement or disposal of an item of property, plant
and equipment are determined as the differences between the net disposal proceeds
and the carrying amount of the item, and are recognised in profit or loss on the date
of retirement or disposal.
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Sun Art Retail Group Limited
Annual Report 2012