Annual Report 2012 - TodayIR.com

Lonking Holdings Limited
Annual Report 2012
Notes to the Consolidated Financial Statements
For the year ended 31 December 2012
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangible assets (other than goodwill)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of
intangible assets acquired in a business combination is the fair value at the date of acquisition. The
useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with
finite lives are subsequently amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period
and the amortisation method for an intangible asset with a finite useful life are reviewed at least
at each financial year end.
Research and development costs
All research costs are charged to profit or loss 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.
Leases
Leases that transfer substantially all the rewards and risks of ownership of assets to the Group,
other than legal title, are accounted for as finance leases. At the inception of a finance lease, the
cost of the leased asset is capitalised at the present value of the minimum lease payments and
recorded together with the obligation, excluding the interest element, to reflect the purchase and
financing.
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 profit or loss 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 profit or loss 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.
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