NOTES TO FINANCIAL STATEMENTS
December 31, 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
MERGER DEFICIT – Merger deficit arises from combination of entities under common control accounted for using
merger accounting method (see “Business Combinations”). The merger reserve represents the difference between
the aggregate nominal amounts of the share capital of the subsidiaries at the date on which they were acquired by
the Group and the nominal amount of the share capital issued by the Company as consideration for the acquisition.
STATUTORY RESERVE – Statutory reserve represents the amount transferred from profit after tax of the
subsidiaries incorporated in the People’s Republic of China (“PRC”) (excluding Hong Kong) in accordance with the
PRC requirement. The statutory reserve cannot be reduced except where approval is obtained from the relevant PRC
authority to apply the amount towards setting off any accumulated losses or increasing capital.
OTHER RESERVE – The negative balance in other reserve represents the net excess of purchase consideration over
the carrying amount of non-controlling interests acquired in the subsidiaries at the date of acquisition.
REVENUE RECOGNITION – Revenue is measured at the fair value of the consideration received or receivable.
Sale of properties developed
Revenue fromproperties developed for sale is recognised when the legal title passes to the buyer or when the equitable
interest in the property vests in the buyer upon release of the handover notice of the respective property to the buyer,
whichever is the earlier. Payments received from buyers prior to this stage are recorded as advances received from
customers for sales of properties and are classified as current liabilities.
Rendering of services
Management fee income and service income are recognised over the period when services are rendered.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable.
Dividend income
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been
established.
Rental income
Rental income from investment properties is recognised on a straight-line basis over the term of the relevant lease.
GOVERNMENT SUBSIDIES – Government subsidies are not recognised until there is reasonable assurance that the
Group will comply with the conditions attaching to them and the subsidies will be received. Government subsidies
are recognised as income over the periods necessary to match them with the related costs. Government subsidies
related to expense items are recognised in the same period as those expenses are charged to the profit or loss and are
reported separately as “other operating income”.
YANLORD LAND GROUP LIMITED
ANNUAL REPORT 2015
80
