2.
Summary of significant accounting policies (cont’d)
2.9 Investment properties
Investment properties are properties that are either owned by the Group or leased under a finance lease that are held in order
to earn rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, or for
administrative purposes, or in the ordinary course of business. Investment properties comprise completed investment properties
and properties that are being constructed or developed for future use as investment properties. Properties held under operating
leases are classified as investment properties when the definition of an investment property is met.
Investment properties are initially measured at cost, including transaction costs. The carrying amount includes the cost of
replacing parts of existing investment properties at the time that cost is incurred if the recognition criteria are met.
Subsequent to initial recognition, investment properties are measured at fair value. Gains or losses arising from changes in the
fair values of investment properties are included in profit or loss in the year in which they arise.
Investment properties are de-recognised when either they have been disposed of or when the investment properties are
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the
retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.
Transfers are made to or from investment properties only when there is a change in use. For a transfer from investment property
to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a
transfer from owner occupied property to investment property, the property is accounted for in accordance with the accounting
policy for property, plant and equipment set out in Note 2.8 up to the date of change in use.
2.10 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable
amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value
in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in
use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples
or other available fair value indicators.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
Hock Lian Seng Holdings Limited
Annual report 2014
52
