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46 GoodLand Group Limited
Notes to the Financial Statements
30 September 2012
2 Signifcant Accounting Policies (cont’d)
(e) Property, Plant and Equipment (cont’d)
On disposal of an item of property, plant and equipment, the difference between the disposal proceeds
and its carrying amount is recognised in proft or loss.
Depreciation is calculated on a straight-line basis to write off the cost (net of residual value) of the property,
plant and equipment over their estimated useful lives. Freehold land has an unlimited useful life and
therefore is not depreciated. The estimated useful lives are as follows:
Freehold building - 50 years
Leasehold land and building - 57 years
Renovation - 5 years
Plant and equipment - 3 to 5 years
Motor vehicles - 5 years
Depreciation of property under construction commences when the asset is ready for its intended use.
The residual values, estimated useful lives and depreciation method of the property, plant and equipment
are reviewed and adjusted as appropriate, at each balance sheet date. The effects of any revisions are
recognised in proft or loss when changes arise.
(f) Investment Properties
Investment properties are properties that are currently held either to earn rental or for capital appreciation
or both. Investment properties are initially recognised at cost, including transaction costs and subsequently
measured at fair value, based on directors’ valuation and/or valuations performed by an independent
professional valuer. Changes in fair values are recognised in proft or loss.
Investment properties are subject to renovations or improvements at regular intervals. The cost of major
renovations and improvements is capitalised as an addition and the carrying amounts of the replaced
components are written off to proft or loss. The cost of maintenance, repairs and minor improvements is
charged to proft or loss when incurred.
When an investment property is disposed of, the resulting gain or loss recognised in proft or loss is the
difference between the net disposal proceeds and the carrying amount of the investment property.
Transfers are made to or from investment property only when there is a change in use. For transfer to
investment property from development properties for sale, the deemed cost for subsequent accounting is
the fair value at the date of change in use.
(g) Development Properties for Sale
Development properties for sale are properties acquired or being constructed for sale in the ordinary course
of business, rather than to be held for the Company’s own use, rental or capital appreciation.
Development properties for sale are measured at the lower of cost and net realisable value.
The costs of development properties include:
- Cost of land;
- Construction costs; and
- Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services,
property transfer taxes and other related costs.
Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed
when paid.
Net realisable value of development properties for sale is the estimated selling price in the ordinary course
of the business, based on market price 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.