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PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.6 Investment properties
(continued)
Transfer to, or from, investment properties are made where there is a change in use, evidenced by:
• development with a view to sell, for a transfer from investment properties to development properties for sale;
• commencement of owner-occupation, for a transfer from investment properties to property, plant and
equipment; and
• end of owner-occupation, for a transfer from property, plant and equipment to investment properties.
When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date
of reclassification become its cost for subsequent accounting.
3.7 Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance
leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the
present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance
with the accounting policy applicable to that asset.
Other leases are operating leases and are not recognised in the Group’s statement of financial position.
3.8 Properties under development
Properties under development are measured at the lower of cost and net realisable value. Cost includes acquisition costs,
development expenditure, capitalised borrowing costs and any other costs directly attributable to the development
activities. Cost includes an appropriate share of development overheads allocated based on normal capacity. Properties
under development acquired through interests in subsidiaries, are accounted for as an acquisition of asset.
Borrowing costs that are directly attributable to the acquisition and development of the property under development are
capitalised as part of the development property during the period of development.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and selling expenses.
Properties under development, the sales of which are recognised using the percentage of completion method
The aggregated costs incurred together with attributable profits and net of progress billings are presented as properties
under development in the statement of financial position. If progress billings exceed costs incurred plus recognised profits,
the balance is presented as deferred income.
Other properties under development
The aggregated costs incurred are presented as properties under development while progress billings are presented
separately as deferred income in the statement of financial position.
