2.
Summary of significant accounting policies (cont’d)
2.15 Development properties
Development properties are properties acquired or being constructed for sale in the ordinary course of business, rather than to
be held for the Group’s own use, rental or capital appreciation.
Development properties are held as inventories and are measured at the lower of cost and net realisable value. Net realisable
value of development properties is the estimated selling price in the ordinary course of business, based on market prices at the
end of the reporting period and discounted for the time value of money if material, less the estimated costs of completion and
the estimated costs necessary to make the sale.
The costs of development properties include:
-
Leasehold rights for land;
-
Amounts paid to contractors for construction, and
-
Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property
transfer taxes, construction overheads and other related costs.
Non-refundable commissions paid to sales or marketing agents on the sales of real estate units are capitalised when incurred.
The costs of development properties recognised in profit or loss on disposal are determined with reference to the specific costs
incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.
Development properties for which revenue is recognised using the percentage of completion method is stated at cost plus
estimated profits to-date less progress billings. For other development properties for which revenue is recognised using the
completed contract method, these are stated at cost while progress billings are presented separately as “progress billings to
customers for development projects” in the balance sheet.
2.16 Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial
instrument. The Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or
loss, directly attributable transaction costs.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
Hock Lian Seng Holdings Limited
Annual report 2014
58
