1992 — Page 46

NOTES ON THE ACCOUNTS

1. ACCOUNTING POLICIES

a.

b.

C.

Translation of foreign currencies

Foreign currency loans for purchases of buses and equipment which are hedged by forward foreign exchange contracts 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 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.

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.

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

New buses

Converted or second-hand buses

Light duty coaches and

other motor vehicles

Plant and machinery, lifts,

fixtures and equipment Tools

Computer equipment

Nil

50 years or over the term of the lease including extension or renewal period whichever is less

7'7% p.a. on cost

1427% p.a. on cost

163% p.a. on cost

1427% p.a. on cost

50% p.a. on reducing balance 20% p.a. on cost

d.

Leased assets

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 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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