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Glorious Property
94
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
2 Summary of Significant Accounting Policies
(Continued)
(a) BASIS OF PRESENTATION
(Continued)
(ii) Standards, amendments and interpretations that are not yet effective and have not been early adopted by
the Group
(Continued)
• HKAS 12 “Income taxes” currently requires an entity to measure the deferred tax relating to an asset depending
on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult
and subjective to assess whether recovery will be through use or through sale when the asset is measured using
the fair value model in HKAS 40, ‘Investment property’. This amendment therefore introduces an exception
to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property
measured at fair value. As a result of the amendments, HK(SIC) 21 “Income taxes − recovery of revalued non-
depreciable assets”, will no longer apply to investment properties carried at fair value. The amendments also
incorporate into HKAS 12 the remaining guidance previously contained in HK(SIC) 21, which is withdrawn.
HKAS 12 (Amendment) will be effective for accounting period beginning on or after 1 January 2012.
• HKFRS 9 “Financial instruments” addresses the classification, measurement and recognition of financial assets
and financial liabilities. HKFRS 9 was issued in November 2009 and October 2010. It replaces the parts of
HKAS 39 that relate to the classification and measurement of financial instruments. HKFRS 9 requires financial
assets to be classified into two measurement categories: those measured as at fair value and those measured
at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s
business model for managing its financial instruments and the contractual cash flow characteristics of the
instrument. For financial liabilities, the standard retains most of the HKAS 39 requirements. The main change is
that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to
an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless
this creates an accounting mismatch. HKFRS 9 will be effective for accounting period beginning on or after 1
January 2015.
• HKFRS 10 “Consolidated financial statements” builds on existing principles by identifying the concept of
control as the determining factor in whether an entity should be included within the consolidated financial
statements of the parent company. The standard provides additional guidance to assist in the determination of
control where this is difficult to assess. HKFRS 10 will be effective for accounting period beginning on or after
1 January 2013.
• HKFRS 11 “Joint arrangements” is a more realistic reflection of joint arrangements by focusing on the rights
and obligations of the arrangement rather than its legal form. There are two types of joint arrangement:
joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and
obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and
expenses. Joint ventures arise where accounts for its interest in assets, liabilities, revenue and expenses.
Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity
accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. HKFRS 11 will be
effective for accounting period beginning on or after 1 January 2013.
• HKFRS 12 “Disclosures of interests in other entities” includes the disclosure requirements for all forms of
interests in other entities, including joint arrangements, associates, special purpose vehicles and other off
balance sheet vehicles. HKFRS 12 will be effective for accounting period beginning on or after 1 January 2013.
• HKFRS 13 “Fair value measurement” aims to improve consistency and reduce complexity by providing a
precise definition of fair value and a single source of fair value measurement and disclosure requirements for use
across HKFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how
it should be applied where its use is already required or permitted by other standards within HKFRSs. HKFRS
13 will be effective for accounting period beginning on or after 1 January 2013.
There are no other HKFRSs or HK(IFRIC) interpretations that are not yet effective that would be expected to have a
material impact on the Group. The Group has already commenced an assessment of the impact of the above new
standards or amendments but is not yet in a position to state whether these new standards or amendments would
have a significant impact on its results of operations and financial position.