53
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.7 Leased assets (cont’d)
Other leases are operating leases and are not recognised in the Group’s statement of
financial position.
3.8 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of
inventories is based on the first-in first-out principle, and includes expenditure incurred
in acquiring the inventories, production or conversion costs, and other costs incurred
in bringing them to their existing location and condition. In the case of manufactured
inventories and work in progress, cost includes an appropriate share of production
overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business,
less the estimated costs of completion and estimated costs necessary to make the sale.
3.9 Development properties
Development properties are properties being constructed or developed for sale. The cost
of properties under development comprises specifically identified costs, including land
acquisition costs, development expenditure, borrowing costs and other expenditure
directly attributable to the development activities. Borrowing costs payable on loans
funding a development property are capitalised, on a specific identification basis,
as part of the cost of the development property until the completion of development.
Development properties are measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business,
less estimated costs of completion and selling expenses.
The development properties in progress have operating cycles longer than one year.
Thus, the Group includes within current assets amounts relating to the development
properties in progress realisable over a period in excess of one year.
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.9 Development properties (cont’d)
(i)
Properties under development, the sales of which are recognised using stage of
completion method
The aggregated costs incurred together with attributable profits and net of
progress billings are presented as development properties in the statement of
financial position. If progress billings exceed costs incurred plus recognised profits,
the balance is presented as deferred income.
(ii) Properties underdevelopment, the sales ofwhichare recognisedusing completion
of construction method
The aggregated costs incurred are presented as development properties while
progress billings are presented separately as deferred income in the statement of
financial position.
3.10 Impairment
(i)
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss, including an
interest in an associate, is assessed at the end of each reporting period to
determine whether there is objective evidence that it is impaired. A financial asset
is impaired if objective evidence indicates that a loss event(s) has occurred after
the initial recognition of the asset, and that the loss event(s) has an impact on the
estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired
can include default or delinquency by a debtor, restructuring of an amount due
to the Group on terms that the Group would not consider otherwise, indications
that a debtor or issuer will enter bankruptcy, adverse changes in the payment
status of borrowers or issuers in the group, economic conditions that correlate
with defaults or the disappearance of an active market for a security. In addition,
for an investment in an equity security, a significant or prolonged decline in its fair
value below its cost is objective evidence of impairment.
