Hong Kong Ferry (Holdings) Co. Ltd.
Notes on the Accounts
1. PRINCIPAL ACCOUNTING POLICIES
(g) Properties held for development
Properties held for development are carried at professional valuation. Surpluses arising on
revaluation are credited to "other property revaluation reserve"; deficits arising on revaluation
are firstly set off against any previous revaluation surpluses and thereafter taken to the profit
and loss account. These properties are reclassified as properties under development when
they are substantially ready for development.
(h) Hotel properties
In accordance with normal practice in the hotel industry, no depreciation is provided on
hotel properties held on leases with more than 20 years to run at the balance sheet date. It is
the Group's policy to maintain the hotel properties in such condition that their value is not
diminished by the passage of time so that any element of depreciation would be immaterial.
Routine maintenance expenditure is charged to the profit and loss account in the year in
which it is incurred. In addition, an annual provision based on the projected maintenance
cost for the next five years under the planned maintenance scheme is charged to the profit
and loss account.
(i) Properties under development
Properties under development for investment purposes are stated at carrying value less
provision for diminution in value. Properties under development for sale are stated at the
lower of carrying value and net realisable value. Carrying value includes amounts transferred
from properties held for development and investment properties, premium paid for land and
other development costs, including any related borrowing costs.
When properties under development for investment purposes are completed, they will be
transferred to investment properties and the revaluation surplus relating thereto will be
transferred to the investment property revaluation reserve.
When properties under development for sale are completed, they will be transferred to
completed properties for sale; the revaluation surplus relating thereto will be credited to the
profit and loss account upon sale of the properties.
When properties under development for sale are sold, revenue and the related costs are
recognised after taking into account the outstanding risks and obligations of the Group under the relevant sales agreement.