NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
91
Annual Report 2014
2.
Significant accounting policies
(continued)
2.4
Property, plant and equipment (continued)
(d)
Disposal
On disposal of an item of property, plant and equipment, the difference between the disposal
proceeds and its carrying amount is recognised in profit or loss within “other gains and losses”.
2.5
Intangible assets
Goodwill on acquisitions
Goodwill on acquisitions of subsidiaries and businesses on or after 1 January 2010 represents the excess
of (i) the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree
and the acquisition-date fair value of any previous equity interest in the acquiree over (ii) the fair value of the
identifiable net assets acquired.
Goodwill on acquisition of subsidiaries and businesses prior to 1 January 2010 and on acquisition of
associated companies represents the excess of the cost of the acquisition over the fair value of the Group’s
share of the identifiable net assets acquired.
Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated
impairment losses.
Goodwill on associated companies is included in the carrying amount of the investments.
Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount
of goodwill relating to the entity sold, except for goodwill arising from acquisitions prior to 1 January 2001.
Such goodwill was adjusted against retained profits in the year of acquisition and is not recognised in profit
or loss on disposal.
2.6
Borrowing costs
Borrowing costs are recognised in profit or loss using the effective interest method except for those costs
that are directly attributable to borrowings acquired specifically for the construction of motor vessels, docks
and quays. The actual borrowing costs incurred during the construction period less any investment income
on temporary investments of these borrowings, are capitalised in the cost of the docks and quays.
2.7
Construction contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and contract
costs are recognised as revenue and expenses respectively by reference to the stage of completion of the
contract activity at the balance sheet date (“percentage-of-completion method”). When the outcome of a
construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract
costs incurred that are likely to be recoverable. When it is probable that total contract costs will exceed
total contract revenue, the expected loss is recognised as an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the
contract work and claims that can be measured reliably. A variation or a claim is recognised as contract
revenue when it is probable that the customer will approve the variation or negotiations have reached an
advanced stage such that it is probable that the customer will accept the claim.
The stage of completion is measured by reference to the completion of a physical proportion of the
contract work. Costs incurred during the financial year in connection with future activity on a contract are
excluded from costs incurred to date when determining the stage of completion of a contract. Such costs
are shown as “construction contract work-in-progress” on the balance sheet unless it is not probable that
such contract costs are recoverable from the customers, in which case, such costs are recognised as an
expense immediately.
