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105
Glorious Property
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
2 Summary of Significant Accounting Policies
(Continued)
(v) REVENUE RECOGNITION
(Continued)
(i) Sales of properties
Revenue and profits from sale of properties is recognised when the risk and rewards of the properties are transferred
to the purchasers, which occurs when legally binding unconditional sales contracts were entered, the construction
of the relevant properties has been completed, the properties have been delivered to the purchasers pursuant to the
sale contracts and collectability of related receivables is reasonably assured. Deposits and installments received on
properties sold prior to the date of revenue recognition are included in the consolidated balance sheet as advance
proceeds received from customers under current liabilities.
(ii) Rental income from operating leases
Rental income receivable under operating leases is recognised in the consolidated statement of comprehensive
income in equal installments over the accounting periods covered by the lease term, except where an alternative
basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives granted
are recognised in the consolidated statement of comprehensive income as an integral part of the aggregate net lease
payments receivable.
Contingent rentals are recognised as income in the accounting period in which they are earned.
(iii) Interest income
Interest income from bank deposits is accrued on a time-apportioned basis using the effective interest method.
(w) OPERATING LEASES
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor), are
charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the
lease.
(x) FINANCE LEASES
The Group leases certain properties. Leases of properties where the Group has substantially all the risks and rewards
of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the
lower of the fair value of the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on
the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in
other long-term payables. The interest element of the finance cost is charged to the consolidated statement of
comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The properties acquired under finance leases are depreciated over the
shorter of the useful life of the asset and the lease term.
(y) DIVIDEND DISTRIBUTION
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s and Company’s
financial statements in the period in which the dividends are approved by the Company’s shareholders or directors, as
appropriate.