Annual - Johnson Electric

NOTES TO THE ACCOUNTS
44. Effect of adopting new HKFRS (Cont’d)
The adoption of revised HKAS 17 has resulted in a change in the accounting policy relating to the reclassification
of leasehold land and land use rights from properties, plant and equipment to operating leases. The up-front
prepayments made for the leasehold land and land use rights are expensed in the profit and loss account on a
straight-line basis over the period of the lease or where there is impairment, the impairment is expensed in the
profit and loss account. In prior years, the leasehold land and land use rights was accounted for at cost less
accumulated depreciation and accumulated impairment.
The adoption of HKASs 32 and 39 has resulted in a change in the accounting policy relating to the classification of
other financial assets at fair value through profit or loss and available-for-sale financial assets.
The adoption of revised HKAS 40 has resulted in a change in the accounting policy of which the changes in fair
values are recorded in the profit and loss account as part of other gains, net. In prior years, the increases in fair
value were credited to the investment properties revaluation reserve. Decreases in fair value were first set off
against increases on earlier valuations on a portfolio basis and thereafter expensed in the profit and loss account.
The adoption of revised HKAS-Int 21 has resulted in a change in the accounting policy relating to the measurement
of deferred tax liabilities arising from the revaluation of investment properties. Such deferred tax liabilities are
measured on the basis of tax consequences that would follow from recovery of the carrying amount of that asset
through use. In prior years, the carrying amount of that asset was expected to be recovered through sale.
The adoption of HKFRS 2 has resulted in a change in the accounting policy for share-based payments. Until 31st
March 2005, the provision of share options to employees did not result in an expense in the profit and loss account.
Effective from 1st April 2005, the Group expenses the cost of share options in the profit and loss account. As a
transitional provision, the cost of share options granted after 7th November 2002 which had not yet vested on 1st
April 2005 was expensed retrospectively in the profit and loss account of the respective periods.
The early adoption of amendment to HKAS 19 provides an option of recognising actuarial gains and losses in full
in the year in which they occur, outside profit and loss account, in reserves. The Group has elected to take the
option to recognise all actuarial gains and losses, including those actuarial gains and losses previously included as
part of the transitional unrecognised liabilities on initial adoption of SSAP 34, Employee benefits. In prior years,
cumulative unrecognised net actuarial gains and losses, to the extent of the amount in excess of 10% of the greater
of the present value of the plan obligations and the fair value of plan assets, were recognised in the profit and loss
account over the average remaining service lives of employees. This change in accounting policy has been applied
restrospectively.
The adoption of HKFRS 3, HKAS 36 and HKAS 38 results in a change in the accounting policy for goodwill. Until
31st March 2005, goodwill was:
– Amortised on a straight line basis over a period ranging from 5 to 20 years; and
– Assessed for an indication of impairment at each balance sheet date.
110 Johnson Electric Holdings Limited