NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
92
COSCO Corporation (Singapore) Limited
2.
Significant accounting policies
(continued)
2.7
Construction contracts (continued)
At the balance sheet date, the cumulative costs incurred plus recognised profits (less recognised losses)
on each contract is compared against the progress billings. Where the cumulative costs incurred plus the
recognised profits (less recognised losses) exceed progress billings, the balance is presented as due from
customers on construction contracts within “trade and other receivables”. Where progress billings exceed
cumulative costs incurred plus recognised profits (less recognised losses), the balance is presented as due
to customers on construction contracts within “trade and other payables”.
Progress billings not yet paid by customers and retentions by customers are included within “trade and
other receivables”. Advances received are included within “trade and other payables”.
2.8
Investment properties
Investment properties include those portions of office buildings that are held for long-term rental yields
and/or for capital appreciation.
Investment properties are initially recognised at cost and subsequently carried at cost less accumulated
depreciation and accumulated impairment losses. Depreciation is calculated using the straight-line method
to allocate the depreciable amounts over the estimated useful lives of 10 to 50 years. The residual values,
useful lives and depreciation method of investment properties are reviewed, and adjusted as appropriate, at
each balance sheet date. The effects of any revision are included in profit or loss when the changes arise.
Investment properties are subject to renovations or improvements at regular intervals. The cost of major
renovations and improvements is capitalised and the carrying amounts of the replaced components are
recognised in profit or loss. The cost of maintenance, repairs and minor improvements is recognised in
profit or loss when incurred.
On disposal of an investment property, the difference between the disposal proceeds and the carrying
amount is recognised in profit or loss.
2.9
Investments in subsidiaries and associated companies
Investments in subsidiaries and associated companies are carried at cost less accumulated impairment
losses in the Company’s balance sheet. On disposal of such investments, the difference between disposal
proceeds and the carrying amounts of the investments are recognised in profit or loss.
2.10 Impairment of non-financial assets
(a)
Goodwill
Goodwill recognised separately as an intangible asset is tested for impairment annually, and
whenever there is indication that the goodwill may be impaired. Goodwill included in the carrying
amount of an investment in associated company is tested for impairment as part of the investment,
rather than separately.
For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-
generating unit (“CGU”) expected to benefit from synergies arising from the business combination.
An impairment loss is recognised when the carrying amount of a CGU, including the goodwill,
exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of a
CGU’s fair value less cost to sell and value-in-use.
The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill
allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying
amount of each asset in the CGU.
An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent
period.
