Notes on The Accounts
(Expressed in Hong Kong dollars)
1.
SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of compliance
These accounts have been prepared in accordance with all applicable Statements of Standard Accounting Practice and Interpretations issued by the Hong Kong Society of Accountants, accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies adopted by the Group is set out below.
(b) Basis of preparation of accounts
The measurement basis used in the preparation of the accounts is historical cost modified by the revaluation of investment properties and land and buildings, and the marking to market of certain investments in securities as explained in the accounting policies set out below.
(c) Basis of consolidation
The consolidated accounts include the accounts of China Motor Bus Company, Limited and its subsidiaries made up to 30th June each year. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from or to the date of their acquisition or disposal, as appropriate. All material intercompany transactions and balances are eliminated on consolidation.
(d) Investment in subsidiaries
A subsidiary is a company in which the Group, directly or indirectly, holds more than half of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors.
Investments in subsidiaries in the company's balance sheet are stated at cost less any provisions for diminution in value which is other than temporary as determined by the directors for each subsidiary individually. Any such provisions are recognised as expenses in the profit and loss account.
(e) Jointly controlled entities
A joint venture is a contractual arrangement whereby the group or company and at least one other party undertake an economic activity which is subject to joint control and none of the parties involved unilaterally has control over the economic activity. The group's interests in jointly controlled entities are accounted for in the consolidated accounts under the equity method and are initially recorded at cost and adjusted thereafter for the post acquisition change in the group's share of net assets of the jointly controlled entities. The consolidated profit and loss account reflects the group's share of the post-acquisition results of operations of the jointly controlled entities for the year.
The results of jointly controlled entities are included in the company's profit and loss account to the extent of dividends received and receivable, providing the dividend is in respect of a period ending on or before that of the company and the company's right to receive the dividend is established before the accounts of the company are approved by the directors. In the company's balance sheet, interests in jointly controlled entities are classified as long-term investments, stated at cost less any provisions for diminution in value which are other than temporary as determined by the directors for each jointly controlled entity individually. Any such provisions are recognised as expenses in the profit and loss account.
(f) Other investments
Other investments are stated in the balance sheet at fair value. Changes in fair value are recognised in the profit and loss account as they arise.
(g) Fixed assets
(i) Investment properties
Freehold investment properties and those with an unexpired lease term of more than 20 years are stated in the balance sheet at their open market value assessed annually by persons holding recognised professional qualifications and every three years by qualified external valuers. Surpluses arising on revaluations on a portfolio basis are credited to the profit and loss account to the extent of any deficits arising on revaluations previously charged to the profit and loss account and are thereafter taken to the investment properties revaluation reserve; deficits arising on revaluations are firstly set off against any previous revaluation surpluses and thereafter taken to the profit and loss account.
On disposal of the investment properties, the related portion of surpluses or deficits previously taken to the investment properties revaluation reserve are transferred to the profit and loss account.
(ii) Property held for redevelopment
Property held for redevelopment for investment purposes is stated at specifically identified cost, including borrowing costs capitalised, aggregate cost of development, materials and supplies, wages and other direct expenses, less any provisions considered necessary by the directors.
(iii) Other fixed assets
All leasehold land held by the company at 30th June, 2001 is stated at cost except for one piece of land owned by the company which is stated at valuation at 30th June, 1962.
All other fixed assets are stated in the balance sheet at cost less accumulated depreciation.
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