ANNUAL REPORT 2015 |
123
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
6.1 Changes in estimates
Estimates are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. The Directors are of the opinion that there are
no significant changes in estimates at the end of the reporting period.
6.2 Critical judgements made in applying accounting policies
The following are judgements made by management in the process of applying the accounting policies of the Group
that have the most significant effect on the amounts recognised in the financial statements.
(a) Classification between investment properties and property, plant and equipment
The Group has developed certain criteria based on MFRS 140
Investment Property
in making judgement whether a
property qualifies as an investment property. Investment property is a property held to earn rentals or for capital
appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that
is held for use in the production or supply of goods or services or for administrative purposes. If these portions
could be sold separately (or leased out separately under a finance lease), the Group would account for the portions
separately. If the portions could not be sold separately, the property is an investment property only if an insignificant
portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is
made on an individual property basis to determine whether ancillary services are so significant that a property does
not qualify as investment property.
(b) Classification of leasehold land
The Group has assessed and classified land use rights of the Group as finance leases based on the extent to
which risks and rewards incidental to ownership of the land resides with the Group arising from the lease term.
Consequently, the Group has classified the unamortised upfront payment for land use rights as finance leases in
accordance with MFRS 117
Leases
.
(c) Contingent rental
The Group has entered into tenancy agreements for the lease of boutiques, which contain contingent rental features
based on predetermined revenue thresholds. The Group has determined that these contingent rental features are
not embedded derivatives to be separately accounted for due to the economic characteristics and risks of these
contingent rental features are closely related to the economic characteristics and risks of the underlying tenancy
agreements. There are no leverage features contained within these contingent rental features.
(d) Contingent liabilities
The determination of treatment of contingent liabilities is based on management’s view of the expected outcome
of the contingencies for matters in the ordinary course of business.
(e) Classification of non-current bank borrowings
Term loan agreements entered into by the Group include repayment on demand clauses at the discretion of financial
institutions. The Group believes that in the absence of a default being committed by the Group, these financial
institutions are not entitled to exercise its right to demand for repayment. Accordingly, the carrying amount of the
term loans have been classified between current and non-current liabilities based on their repayment period.
(f) Contingent liabilities on corporate guarantees
The Directors are of the view that the chances of the financial institutions to call upon the corporate guarantees are
remote.
