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SIGNIFICANT ACCOUNTING POLICIES (continued)
(f)
Translation of foreign currencies
Foreign currency loans for purchases of buses and equipment which are hedged by forward foreign exchange contracts taken out with the lender are stated at the appropriate contracted rates of exchange. With this exception, foreign currency balances at the year end are translated into Hong Kong dollars at 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 of exchange ruling at the transaction dates. Differences on foreign currency translation are taken to the profit and loss account.
(g) Spare parts and stores
Spare parts and stores are valued at cost less provision.
Cost includes cost of purchases of materials, direct labour and an appropriate proportion of overheads.
(h) Amortisation and depreciation
Amortisation and depreciation is provided at rates calculated to write off the cost or valuation of fixed assets over their estimated useful lives as follows:
Leasehold land
Buildings
New buses
Light duty coaches and other motor vehicles
Plant and machinery, lifts, fixtures and equipment
Tools
Computer equipment
(i)
Leased assets
Over the terms of the leases
50 years or over the term of the lease
including extension or renewal period whichever is less
7 1/7% p.a. on cost
16 2/3% p.a. on cost
14 2/7% p.a. on cost
50% p.a. on reducing balance
20% 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.
(j) Deferred taxation
Deferred taxation is provided using 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.
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