NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories
(1)
(i)
Trading stocks
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Trading stocks are stated at the lower of cost and net realisable value. Cost includes the cost of materials computed using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
(ii)
Spare parts and consumables
Spare parts and consumables are stated at cost, computed using the weighted average method, less provision for obsolescence.
(iii)
Work in progress
Work in progress are construction and repairing in progress at the end of the reporting period and are recorded at the net amount of costs incurred plus recognised profits less recognised losses and progress billings.
(iv)
Property development
Inventories in respect of property development activities are carried at the lower of cost and net realisable value. Cost and net realisable values are determined as follows:
Properties under development for sale
The cost of properties under development for sale comprises specifically identified cost, including the acquisition cost of land, aggregate cost of development, materials and supplies, wages and other direct expenses, and an appropriate proportion of overheads. Net realisable value represents the estimated selling price less estimated costs of completion and costs to be incurred in selling the property.
Hong Kong Ferry (Holdings) Company Limited Annual Report 2016
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