NOTES ON THE ACCOUNTS
I ACCOUNTING POLICIES
a Translation of foreign currencies
Foreign currency loans for purchases of buses and equipment are stated at the contracted rates of exchange. With this exception, foreign currency balances at the year end are translated into Hong Kong dollars at approximately the rates of exchange ruling at the balance sheet date and foreign currency transactions during the year are translated into Hong Kong dollars at the rates ruling at the transaction dates. Differences on foreign currency translation are taken to the profit and loss account.
b Spare parts and stores
Spare parts and stores are valued at cost less provision.
c Depreciation
Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets over their estimated useful lives as follows:—
Land held on long leases with unexpired term in
excess of 50 years
Buildings
Buses and other motor vehicles
Plant and machinery, lifts, fixtures and equipment Tools
Terminal shelters
d Leased assets
Nil
Equal instalments over the period
of the lease, excluding any
renewal period
10% p.a. on cost
10% p.a. on cost
50% p.a. on reducing balance 10% p.a. on cost
Payments under operating leases are charged to the profit and loss account on a straight line basis over the periods of the respective leases.
e Deferred taxation
Deferred taxation is calculated under the liability method in respect of the taxation effect arising from all timing differences which are expected with reasonable probability to crystallise in the foreseeable future.
2 TURNOVER
Turnover comprises fares and other income from the operation of franchised public buses by the Company.
40