New World Development Company Limited
120
Financial Section
3 Principal Accounting Policies
(continued)
(b) Intangible assets
(continued)
(vii) Intangible concession rights
(continued)
Land use rights acquired in conjunction with the Service Concessions which the Group has no discretion or
latitude to deploy for other services other than the use in the Service Concessions are treated as intangible
assets acquired under the Service Concessions.
Amortisation of intangible concession rights is calculated to write off their costs, where applicable, on an
economic usage basis for roads and bridges whereby the amount of amortisation is provided based on the ratio
of actual volume compared to the total projected volume or on a straight-line basis for water treatment plants
over the periods which the Group is granted the rights to operate these Infrastructures. The total projected
volume of the respective Infrastructures is reviewed regularly with reference to both internal and external
sources of information and appropriate adjustments will be made should there be a material change.
(c) Non-current assets or disposal groups classified as assets held for sale
Non-current assets or disposal groups are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower
of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a
sale transaction rather than through continuing use. Investment properties classified as non-current assets held for
sale are stated at fair value at the end of the reporting period.
(d) Land use rights
The upfront prepayments made for the land use rights held under operating leases are expensed in the consolidated
income statement on a straight-line basis over the period of the lease or when there is impairment, the impairment is
expensed in the consolidated income statement.
(e) Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the
Group, is classified as investment property. Investment property also includes property that is being constructed or
developed for future use as investment property.
Investment property comprises land held under operating leases and buildings held under finance leases. Land held
under operating leases are classified and accounted for as investment property when the rest of the definition of
investment property is met. The operating lease is accounted for as if it was a finance lease.
Investment property is measured initially at its cost, including related transaction costs and where applicable
borrowing costs. After initial recognition, investment property is carried at fair value. Fair value is determined by
professional valuation conducted at the end of each reporting period. Changes in fair value are recognised in the
consolidated income statement.
Subsequent expenditure is included in the carrying amount of the asset only when it is probable that future economic
benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other
repairs and maintenance costs are expensed in the consolidated income statement during the financial period in
which they are incurred.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair
value at the date of reclassification becomes its cost for accounting purposes.
If a property becomes an investment property because its use has changed, any difference resulting between the
carrying amount and the fair value of this property at the date of transfer is recognised in equity as a revaluation of
property, plant and equipment. However, if the fair value of the property at the date of transfer which results in a
reversal of the previous impairment loss, the write-back is recognised in the consolidated income statement.
