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Gamuda Berhad (29579-T) • Annual Report 2012
2.
Summary of significant accounting policies (cont’d.)
2.13 Land held for property development and property development costs
(i)
Land held for property development
Land held for property development consists of land where no development activities have been carried
out or where development activities are not expected to be completed within the normal operating cycle.
Such land is classified within non-current assets and is stated at cost less any accumulated impairment
losses. The policy for the recognition and measurement of impairment losses is in accordance with Note
2.15.
Land held for property development is reclassified as property development costs at the point when
development activities have commenced and where it can be demonstrated that the development
activities can be completed within the normal operating cycle.
(ii)
Property development costs
Property development costs comprise all costs that are directly attributable to development activities or
that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development
revenue and expenses are recognised in profit or loss by using the stage of completion method. The
stage of completion is determined by the proportion that property development costs incurred for work
performed to date bear to the estimated total property development costs.
Where thefinancial outcomeof adevelopment activity cannot be reliably estimated, property development
revenue is recognised only to the extent of property development costs incurred that is probable will be
recoverable, and property development costs on properties sold are recognised as an expense in the
period in which they are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability
period, is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset, which ismeasured
at the lower of cost and net realisable value.
The excess of revenue recognised in profit or loss over billings to purchasers is classified as accrued
billings within trade receivables and the excess of billings to purchasers over revenue recognised in
profit or loss is classified as progress billings within trade payables.
NoTES To ThE FINANCIAL STATEMENTS
31 July 2012