Sample Disclosure – Land Held For Development And Property Development Costs (15 September 2009)

Land Held for Property Development and Property Development Costs

 

Land and development expenditure are classified as property development costs under current assets when significant development work has been undertaken and is expected to be completed within the normal operating cycle.

 

Property development revenue are recognised for all units sold using the percentage of completion method, by reference to the stage of completion of the property development projects at the balance sheet date as measured by the proportion that development costs incurred for work performed to-date bear to the estimated total property development costs on completion.

 

When the outcome of a property development activity cannot be estimated reliably, property development revenue is recognised to the extent of property development costs incurred that is probable of recovery.

 

Any anticipated loss on property development project (including costs to be incurred over the defects liability period), is recognized as an expense immediately as foreseeable losses.

 

Accrued billings represent the excess of property development revenue recognised in the income statements over the billings to purchasers while progress billings represents the excess of billings to purchasers over property development revenue recognised in the income statements.

 

Land held for development and costs attributable to the development activities which are held for future development where no significant development has been undertaken is stated at cost less impairment costs (if any). Such assets are transferred to property development activities when significant development has been undertaken and the development is expected to be completed within the normal operating cycle.

Sample Disclosure – Note On Property Development Costs (13 February 2009)

PROPERTY DEVELOPMENT COSTS


2008

RM

2007

RM

Land – at cost

x,xxx,xxx

x,xxx,xxx

Add : Incidental costs

xxx,xxx

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Cumulative land cost recognised as an expense in income

Statement

(x,xxx,xxx)

(x,xxx,xxx)

x,xxx,xxx

x,xxx,xxx

Add : Development costs
Balance at beginning of year

x,xxx,xxx

x,xxx,xxx

Additions during the financial year

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Less: Cumulative development costs recognised as an

expense in income statement

(x,xxx,xxx)

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Less: Transfer to closing inventories (Note x)

(x,xxx,xxx)

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx

Included in development cost is the interest charged as follows:

2008

RM

2007

RM

Balance at beginning of year

x,xxx,xxx

x,xxx,xxx

Amount included in additions during the year

xxx,xxx

xxx,xxx

Balance at end of year

x,xxx,xxx

x,xxx,xxx