NOTES TO FINANCIAL STATEMENTS
December 31, 2015
3
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
(Cont’d)
Land Appreciation Tax (“LAT”)
Income from sale of properties in the PRC is subject to LAT at progressive rates under the PRC tax laws and
regulations. The management estimates and provides for LAT in accordance with the PRC tax laws and regulations.
The management has assessed and considers the provision of LAT as at the end of the reporting period to be adequate.
Control over entity for which the Group does not have more than 50% ownership interest and voting rights
Note 10 describes that Shanghai Renpin Property Development Co., Ltd. is subsidiary of the Group even though the
Group has only a 50% ownership interest and voting rights in this entity.
The management of the Company assessed whether or not the Group has control over this entity based on whether the
Group has the practical ability to direct the relevant activities of this entity unilaterally. In making their judgement,
the management considered the Group’s rights arising from the contractual arrangements. After assessment, the
management concluded that the Group has a sufficiently dominant voting interest and power to direct the relevant
activities of this entity and therefore the Group has control over this entity.
Classification of Singapore Intelligent Eco Island Development Pte. Ltd. as joint venture
Singapore Intelligent Eco Island Development Pte. Ltd. is a Singapore-incorporated company whose legal form
confers separation between the parties to the joint arrangement and the company itself. Furthermore, there is no
contractual arrangement or any other facts and circumstances that indicate that the parties to the joint arrangement
have rights to the assets and obligations for the liabilities of the joint arrangement. Accordingly, Singapore Intelligent
Eco Island Development Pte. Ltd. is classified as a joint venture of the Group.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Carrying amounts of properties for development, completed properties for sale and properties under development
for sale
The aggregate carrying amount of these properties totalled RMB42.672 billion as at December 31, 2015 (2014 :
RMB44.885 billion), details of which are disclosed in Note 9. They are stated at cost less allowance for impairment
in value or at the lower of cost and net realisable values, assessed on an individual project basis.
When it is probable that the total project costs will exceed the total projected revenue net of selling expenses, i.e. net
realisable value, the amount in excess of net realisable value is recognised as an expense immediately.
The process of evaluating the net realisable value for each property is subject to management’s judgement and
the effect of assumptions in respect of development plans, timing of sale and the prevailing market conditions.
Management performs cost studies for each project, taking into account the costs incurred to date, the development
status and costs to complete each development project. Any future variation in plans, assumptions and estimates can
potentially impact the carrying amounts of the respective properties.
YANLORD LAND GROUP LIMITED
ANNUAL REPORT 2015
84
