NOTES TO FINANCIAL STATEMENTS
December 31, 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless
another systematic basis is more representative of the time pattern in which use benefit derived from the leased
asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are recognised on a
straight-line basis over the lease term on the same basis as the leased income.
The Group as lessee
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the
relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits
from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense
in the period in which they are incurred.
PROPERTIES FOR DEVELOPMENT – Properties for development are mainly vacant leasehold land for future
development in respect of which physical construction is not expected to commence within twelve months from the
end of the reporting period. They are stated at cost less allowance for any impairment in value.
PROPERTIES UNDER DEVELOPMENT FOR SALE – Properties under development for sale are stated at lower
of cost and net realisable value. Net realisable value takes into account the price ultimately expected to be realised
and the anticipated costs to completion. Cost of property under development comprises land cost, development
costs and borrowing costs capitalised during the development period. When completed, the units held for sale are
classified as completed properties for sale.
Properties under development for sale include properties in respect of which concrete planning and preparatory
activities have been approved by management and have commenced, and physical construction is expected to
commence within twelve months from the end of the reporting period.
COMPLETED PROPERTIES FOR SALE – Completed properties for sale are stated at lower of cost or net realisable
value. Cost is determined by apportionment of the total land cost, development costs and capitalised borrowing
costs based on floor area of the unsold properties. Net realisable value is determined by reference to sale proceeds of
properties sold in the ordinary course of business less all estimated selling expenses; or is estimated by management
in the absence of comparable transactions after taking into consideration prevailing market conditions.
PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairment losses.
Construction-in-progress consists of land cost, construction costs and capitalised borrowing costs incurred during
the period of construction.
Depreciation is charged so as to write off the cost of property, plant and equipment, other than construction-in-
progress, over their estimated useful lives, using the straight-line method on the following bases:
Leasehold land and buildings
–
2% to 5%
Motor vehicles
–
10% to 25%
Furniture, fixtures and equipment
–
20%
YANLORD LAND GROUP LIMITED
ANNUAL REPORT 2015
76
