1989 — Page 18

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NOTES ON THE ACCOUNTS (Continued)

(d) Depreciation (continued)

Investment properties

Vessels

No depreciation is provided in respect of investment properties with an unexpired lease term of over 20 years since the valuation takes into account the state of each property at the date of valuation

3.33% 12.5%

-

Motor vehicles

25%

Machinery, furniture and other fixed assets

10%

(e) Stocks and work in progress

Stocks and work in progress are valued at the lower of cost and net realisable value. In respect of work in progress, cost includes cost of purchase of materials, direct labour and expenses and an appropriate proportion of production overheads, less any foreseeable losses and progress payments receivable to date. No profit is taken until the work is fully completed.

(f) Assets under construction

(i) Vessels

Construction cost is transferred to fixed assets on granting of the marine licence.

(ii) Property

Land cost relating to property which is being developed for investment purposes is included in fixed assets under leasehold land.

Property development expenditure, inclusive of interest, is included as cost of development up to the date when the occupation permit is granted.

(g) Translation of foreign currencies

Foreign currency transactions during the year are translated into Hong Kong dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities in foreign currencies are translated into Hong Kong dollars at approximately the market rates of exchange ruling at the balance sheet date except for balances where foreign exchange contracts have been undertaken, in which case the rates applicable to the contracts have been used for the translation. Exchange gains and losses on foreign currency translation are dealt with in the profit and loss account.

(h) 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.

(i) Operating leases

Payments under operating leases are charged to the profit and loss account on a straight line basis over the periods of the respective leases.