Page 111 - S P Setia Annual Report 2013
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Annual Report 2013 S P SETIA BERHAD GROUP Financial Statements | 109





NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2013 (CONT’D)






1. SiGniFicant accOUntinG POlicieS (cOnt’D)

(m) leases (cont’d)
(i) Finance lease (cont’d)

Property, plant and equipment acquired by way of fnance leases are stated at amounts equal to the lower of their fair values and
the present value of minimum lease payments at the inception of the leases, less accumulated depreciation and any impairment
losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if this is
determinable; if not, the Group’s incremental borrowing rate is used.

(ii) Operating lease

An operating lease is a lease other than a fnance lease.
Operating lease income or operating lease rentals are credited or charged to proft or loss on a straight-line basis over the period
of the lease.
(n) Development properties

Development properties are classifed under two categories, i.e. land held for property development and property development costs.

Land held for property development is defned as land on which development is not expected to be completed within the normal
operating cycle. Usually, no signifcant development work would have been undertaken on these lands other than infrastructure work,
earth work and landscape work incurred to put the land ready for development. Accordingly, land held for property development is
classifed as non-current assets on the statement of fnancial position and is stated at cost plus incidental expenditure incurred to put
the land in a condition ready for development.

Land on which development has commenced and is expected to be completed within the normal operating cycle is included in
property development costs. Property development costs comprise all costs that are directly attributable to development activities or
that can be allocated on a reasonable basis to such activities.

Where the outcome of a development can be reasonably estimated, revenue is recognised on the percentage of completion method.
The stage of completion is determined by the proportion that costs incurred to-date bear to estimated total costs. In applying this
method of determining stage of completion, only those costs that refect actual development work performed are included as costs
incurred.
Where the outcome of a development cannot be reasonably estimated, revenue is recognised to the extent of property development
costs incurred that is probable will be recoverable, and the property development costs on the development units sold shall be
recognised as an expense in the period in which they are incurred.

When it is probable that total costs will exceed total revenue, the foreseeable loss is immediately recognised in proft or loss irrespective
of whether development work has commenced or not, or of the stage of completion of development activity, or of the amounts of
profts expected to arise on other unrelated development projects.

The excess of revenue recognised in proft or loss over the billings to purchasers of properties is recognised as accrued billings under
current assets.

The excess of billings to purchasers of properties over revenue recognised in proft or loss is recognised as progress billings under
current liabilities.
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