(and all the land where applicable) should be provided from the date the buildings can be put to effective use by the enterprise'.
The parenthetical clause 'and of the land where applicable' obviously refers to paragraph 16 where the relevant lease has an unexpired term of not less than 50 years (including the renewal period ),
Paragraph 25 states that the useful life of depreciable assets should be estimated after considering, among other things, 'legal and other
limits on the use of an asset'.
Taking only these 3 paragraphs at their face value, one is immediately led to conjecture as to the reaction of an investor faced with the Profit and Loss Account of 2 companies, each holding a building as its
only income-producing asset.
Company A's building is located at, say, north Boundary Street, Kowloon, while the company B's building is located on the opposite
side of the street on the southern side.
The following hypothethical Profit and Loss Account of these 2 companies
would look like this :
pothetical
Hypothetical Profit and Loss Account
Rental Income
Expenses (excluding depreciation )
*
Depreciation
NET PROFIT
-2-
Company A
Company B
4
1978
1978
1,000,000
1,000,000
100,000
100,000
900,000
900,000
526,316
75,000
$373,684
$825,000
No comments yet.
Private notes are available after approval.