Critical Accounting Policies and
Recommended Accounting Practice
As required by the Companies Act,
the Group's and Company's financial
statements have been prepared in
accordance with Singapore Financial
Reporting Standards ("FRS").
The following are the critical
accounting policies:
Revenue and Profit Recognition
Revenue and profit on partly completed
projects which are held for sale are
recognised using the percentage
of completion method.
For Singapore trading properties under
development, the profit recognition
upon the signing of sales contracts
and payment of the first instalment
is 20% of the total estimated profit
attributable to the actual contracts
signed. Subsequent recognition of
profit is based on the stage of
physical completion.
For overseas trading properties under
development, the profit recognition
upon the signing of sales contracts is
the direct proportion of total expected
project profit attributable to the actual
sales contracts signed, but only to the
extent that is related to the stage of
physical completion.
The more conservative percentage of
completion method for overseas trading
properties is appropriate as markets
there are less matured and risks are
greater. In respect of large trading projects
both in Singapore and overseas, the
percentage of completion method is
applied on a phase-by-phase basis
(i.e. one phase for every part of a project
with one temporary occupation permit).
Business Combinations
Under the relevant reporting standard,
assets and liabilities of subsidiaries
which the Group acquired during the
year were stated at their fair values
at the dates of acquisition.
Investment Properties
Investment properties are initially
recognised at cost and subsequently
measured at fair value, determined
annually by Directors based on valuations
by independent professional valuers.
Changes in fair values of investment
properties less provision for deferred
tax are recognised in the profit and loss
account in the year in which they arise.
Leasehold Properties
Leasehold properties (except for those
with unexpired tenures of over 20 years)
are depreciated evenly over the period
of the lease. Leasehold properties with
unexpired tenures of more than 20 years
are treated as investment properties
and are accounted for in accordance
with FRS 40.
Adoption of New and Revised Standards
In the current year, the Group adopted
a few standards that are relevant and
effective for financial years beginning
on or after 1 January 2009.
The adoption of these standards did
not result in any substantial change
to the Group's accounting policies nor
any significant impact on the financial
statements, except for additional
disclosures and the adoption of the
amendments to FRS 40 Investment
Property, the effects of which are
disclosed below.
The principal effects of these changes
are as follows:
FRS 1 Presentation of Financial
Statements (Revised)
The revised FRS 1 separates owner
and non-owner changes in equity. The
statement of changes in equity includes
only details of transactions with owners,
with all non-owner changes in equity
presented in the statement of other
comprehensive income. In addition,
the Standard introduces the statement
of comprehensive income which presents
income and expense recognised in the
period. This statement may be presented
in one single statement, or two linked
statements. The Group has elected to
present this statement as two linked
statements.
Amendments to FRS 107 Financial
Instruments: Disclosures
The amendments to FRS 107 require
additional disclosure about fair value
measurement and liquidity risk. Fair
value measurements are to be disclosed
by source of inputs using a three-level
hierarchy for each class of financial
instrument. In addition, reconciliation
between the beginning and ending
balance for Level 3 fair value
measurements is now required, as well
as significant transfers between Level 1
and Level 2 fair value measurements.
The amendments also clarify the
requirements for liquidity risk disclosures.
The liquidity risk disclosures and fair value
measurement disclosures are presented
in the notes to the financial statements.
FRS 108 Operating Segments
FRS 108 requires disclosure of
information about the Group's operating
segments and replaces the requirement
to determine primary and secondary
reporting segments of the Group. The
Group determined that the reportable
operating segments are the same as
the business segments previously
identified under FRS 14 Segment
Reporting. Additional disclosures about
each of the segments are shown in the
notes to the financial statements, including
revised comparative information.
Improvements to FRSs issued
in 2008
In 2008, the Accounting Standards
Council issued an omnibus of
amendments to FRS. There are
separate transitional provisions for
each amendment. The effects of the
adoption of the amendments to
FRS 40 Investment Property are
disclosed below.
Amendments to FRS 40 Investment
Property
The Group's associated companies have
properties that are being constructed
for future use as investment properties.
Upon adoption of the amendments to
FRS 40, these investment properties
under construction are measured at fair
value with changes in fair values being
recognised in the profit and loss account
when fair value can be determined reliably.
This change in accounting policy has
been applied prospectively, resulting in
a fair value gain on investment properties
of $103.7 million in the profit and loss
account, offset by a deferred tax expense
of $17.6 million.
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