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111
Glorious Property
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
3 Financial Risk Management
(Continued)
(c) FAIR VALUE ESTIMATION
The Group does not have any financial instruments that are measured in the balance sheet at fair value.
The carrying amounts of the Group’s financial assets and liabilities (including cash and cash equivalents, trade and
other receivables, trade and other payables) approximate their fair values due to their short maturities.
4 Critical Accounting Estimates and Judgements
Estimates and judgements used in preparing the consolidated financial statements are evaluated and based on
historical experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that may have a significant effect on the carrying amounts of assets and liabilities within the next financial year are
discussed below.
(a) SALES RECOGNITION ON PROPERTIES SOLD
When the inflow of economic benefits associated with the property sales transaction is assessed to be probable and
significant risks and rewards of ownership of properties are transferred to purchasers, the Group recognised revenue
in respect of the properties sold.
Management made judgement on whether the economic benefits associated with the property sales transaction
will flow to the Group. Likelihood of inflow of economic benefits to the Group is demonstrated by the purchaser’s
commitment to pay, which in turn is supported by substantial investment that gives the purchaser a stake in the
property sufficient that the risk of loss through default motivates the purchaser to honour the obligation to the
Group. Inflow of economic benefits associated with the property sales transaction is also assessed by considering
location of the property and the prevailing market price of similar properties.
Management has also made judgement on when significant risks and rewards of ownership of properties are
transferred to purchasers. Risk and rewards of ownership of properties are transferred to purchasers upon which the
construction of relevant properties has been completed and upon which the beneficial interest in the properties has
been passed to the purchasers.
The judgement on the likelihood of inflow of economic benefits associated with the property sales transaction and
the transfer of risks and rewards of ownership of properties would affect the Group’s profits for the year and the
carrying value of completed properties held for sale.
(b) INCOME TAX AND DEFERRED INCOME TAX
Significant judgement is required in determining the provision for income tax. There are many transactions and
calculations for which the ultimate determination is uncertain during the ordinary course of business. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such difference will
impact the income tax and deferred tax provision in the period in which such determination is made.
Deferred income tax assets relating to certain temporary differences and tax losses are recognised when
management considers to be probable that future taxable profit will be available against which the temporary
differences or tax losses can be utilised. The outcome of their actual utilisation may be different.