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Glorious Property
112
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
4 Critical Accounting Estimates and Judgements
(Continued)
(c) LAND APPRECIATION TAX
The Group is subject to land appreciation tax in the PRC. However, the implementation and settlement of
these taxes varies among various tax jurisdictions in cities of the PRC, and the Group has not finalised its land
appreciation taxes calculation and payments with any local tax authorities in the PRC. Accordingly, significant
judgement is required in determining the amount of the land appreciation and its related taxes. The Group
recognised these land appreciation taxes based on management’s best estimates according to the understanding
of the tax rules. The final tax outcome could be different from the amounts that were initially recorded, and these
differences will impact the income tax expense and deferred income tax provisions in the periods in which such
taxes have been finalised with local tax authorities.
(d) ESTIMATED VALUATION OF INVESTMENT PROPERTIES
Investment properties are stated at fair value based on the valuation performed by an independent and
professionally qualified valuer.
In determining the fair value, the valuer has based on property valuation techniques which involve, inter alia,
certain estimates including comparable sales in the relevant market, current market rents for similar properties
in the same location and condition, appropriate discount rates and expected future market rents. In relying on
the valuation report, management has exercised their judgement and is satisfied that the method of valuation is
reflective of the current market condition.
(e) IMPAIRMENT ASSESSMENT OF TRADE AND OTHER RECEIVABLES
Generally, the Group requires full payment from customers before delivery of properties. Credit terms are only
granted to customers in very rare cases upon obtaining approval from the Company’s senior management after
assessing the credit history of those customers. The Group has set out policies to ensure follow-up action is taken to
recover overdue debts and the Group reviews regularly the recoverable amount of each individual trade and other
receivables.
5 Segment Information
The Board has been identified as the chief operating decision-maker. Management determines the operating
segments based on the Group’s internal reports, which are submitted to the Board for performance assessment and
resources allocation.
The Board considers the business from geographical perspective and assesses the performance of property
development in four reportable operating segments, namely Shanghai Region, Yangtze River Delta (excluding
Shanghai), Pan Bohai Rim and Northeast China. “Others” segment represents corporate support functions.
The Board assesses the performance of the operating segments based on a measure of segment results. This
measurement basis excludes the effects of non-recurring expenditure from the operating segments. Other
information provided, except as noted below, to the Board is measured in a manner consistent with that in the
consolidated financial statements.
Total segment assets excluded deferred income tax assets and other unallocated corporate assets.