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Glorious Property
106
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
2 Summary of Significant Accounting Policies
(Continued)
(z) FINANCIAL GUARANTEE
Financial guarantee liabilities are recognised in respect of the financial guarantee provided by the Group for
property purchasers.
Financial guarantee liabilities are recognised initially at fair value plus transaction costs that are directly attributable
to the issue of the financial guarantee liabilities. After initial recognition, such contracts are measured at the higher
of the present value of the best estimate of the expenditure required to settle the present obligation and the amount
initially recognised less cumulative amortisation.
Financial guarantee liabilities are derecognised from the balance sheet when, and only when, the obligation
specified in the contract is discharged or cancelled or expired.
(aa) PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it
is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognised as interest expense.
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Group. It can also be a present obligation arising from past events that is not recognised because it is
not probable that outflow of economic resources will be required or the amount of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclosed in the notes to the consolidated financial statements. When a
change in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.
(ab) GOVERNMENT GRANTS
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant
will be received and the Group will comply with all attached conditions. Government grants related to income and
not related to assets are recognised in the consolidated statement of comprehensive income.
(ac) SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker is responsible for making strategic decisions, allocating
resources and assessing performance of the operating segments.