Tag: sample accounting policy

Sample Disclosure – Accounting Policy Of Employee Equity Compensation Benefits (ESOS) (24 November 2009)

EMPLOYEE EQUITY COMPENSATION BENEFITS

The Employees’ Share Option Schemes (“ESOSs”) of the Company and a subsidiary grant the Group’s eligible employees options to subscribe for shares in the Company and the subsidiary at pre-determined subscription prices. These equity compensation benefits are recognised as an expense with a corresponding increase in equity over the vesting period as share option reserve. The total amount to be recognised is determined by reference to the fair value of the share options at grant date and the estimated number of share options expected to vest on vesting date.

Sample Disclosure – Accounting Policy Of Biological Assets (22 November 2009)

Biological Assets

All expenses incurred in land preparation, planting and development of crops up to maturity are capitalised as biological assets; all expenses subsequent to maturity are recognised directly in income statement.

Biological assets are stated at revalued amount, which is the fair value at date of revaluation less any accumulated impairment losses. Fair value is determined by market-based evidence by appraisal that is carried out by professionally qualified valuers. Revaluation of biological assets are carried out at sufficient regularity and any material differences are adjusted accordingly to ensure that the carrying value of the assets does not differ materially from the fair values determined as at balance sheet date.

Any revaluation surplus is credited to the revaluation reserve account, except that if the surplus reverses the previously recognised revaluation decrease in income statement of the same asset, such surplus would be recognised in income statement until it completely reverses the previously recognised revaluation decrease before any excess amount of surplus is recognised in the revaluation reserve account within equity. Such revaluation reserve account is classified as part of non-distributable reserves within equity section of the Company.

A revaluation decrease is first recorded as a set-off against the amount of previously recognised revaluation surplus in equity of the same asset and any balance of revaluation decrease thereafter are recognised in income statement.

Upon disposal or retirement of biological assets, the differences between the disposal proceeds and the carrying value of such biological assets are recognised as gains or losses in income statement accordingly. Any balance of revaluation reserve account for such assets are then transferred to retained earnings and thereafter is available for distribution to the equity holders of the Company.

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 – Accounting Policy On Construction Contracts (15 Septemeber 2009)

Construction Contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date, measured as the physical proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately as allowance for foreseeable loss.

When costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds billings to contract customers, the balance is shown as amount due from contract customers. When billings to contract customers exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amount due to contract customers.

Sample Disclosure – Accounting Policy On Other Investments (26 August 2009)

Other investments

Non-current investments other than investments in subsidiaries and associates are stated at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the period in which the decline is identified. All current investments are carried at the lower of cost and market value, determined on an aggregate portfolio basis by category of investments. Upon disposal of such investment, the difference between net disposal proceeds and its carrying amount is recognised in profit or loss.

Sample Disclosure – Accounting Policy On Investment In Subsidiary Companies (26 August 2009)

Subsidiaries

A subsidiary is an entity in which the Group and the Company have power to control the financial and operating policies so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

An investment in subsidiary, which is eliminated on consolidation, is stated in the Company’s separate financial statements at cost less impairment losses, if any. On disposal of such an investment, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.