Annual Report 2012 - e-KONG Group Limited

2. PRINCIPAL ACCOUNTING POLICIES (continued)LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks andrewards of ownership to the lessee. All other leases are classified as operating leases.Assets held under finance leases are recognised as assets of the Group at the lower of the fair value of theleased asset and the present value of the minimum lease payments. The corresponding liability to the lessor isincluded in the statement of financial position as a finance lease obligation. Finance costs, which represent thedifference between the total leasing commitments and the fair value of the assets acquired, are charged to theincome statement over the terms of the relevant leases so as to produce a constant periodic rate of charge onthe remaining balances of the obligations for each accounting period.Rentals payable under operating leases are recognised as an expense on the straight-line basis over the term ofthe relevant leases.Lease incentives are recognised in the income statement as an integral part of the net consideration agreed forthe use of the leased asset.Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which areassets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to thecost of those assets until such time as the assets are substantially ready for their intended use or sale. Investmentincome earned on the temporary investment of specific borrowings pending their expenditure on qualifying assetsis deducted from the borrowing costs eligible for capitalisation.All other borrowing costs are recognised in the income statement in the period in which they are incurred.Share capitalOrdinary shares are classified as equity. Where any group company purchases the Company’s equity share capital(treasury shares), the consideration paid, including any directly attributable incremental transaction costs (net ofincome taxes, if applicable), is deducted from equity attributable to the equity holders of the Company until theshares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, netof any directly attributable incremental transaction costs and the related income tax effects, is included in equityattributable to the equity holders of the Company.Annual Report 2012 45