128 | CapitaLand Limited Annual Report 2014
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)
2.8 Financial instruments
(cont’d)
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(cont’d)
An impairment loss in respect of a mnancial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash nows discounted at the
original effective interest rate. Losses are recognised in the promt or loss and renected as an allowance
account against receivables. When the Group considers that there are no realistic prospects of recovery of
the asset, the relevant amounts are written off. When a subsequent event causes the amount of impairment
loss to decrease, the decrease in impairment loss is reversed through promt or loss.
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses
accumulated in the available-for-sale reserve in equity to promt or loss. The cumulative loss that is reclassimed
from equity to promt or loss is the difference between the acquisition cost, net of any principal repayment and
amortisation, and the current fair value, less any impairment loss recognised previously in the promt or loss.
Changes in impairment provision attributable to application of the effective interest method are renected as
a component of interest income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the
increase can be related objectively to an event occurring after the impairment loss was recognised in the
promt or loss, then the impairment loss is reversed, with the amount of the reversal recognised in the promt
or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security
is recognised in other comprehensive income.
An impairment loss in respect of an associate or joint venture is measured by comparing the recoverable
amount of the investment with its carrying amount in accordance with note 2.11. An impairment loss is
recognised in promt or loss. An impairment loss is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount.
2.9 Share capital
Ordinary shares are classimed as equity.
Incremental costs directly attributable to the issue of ordinary shares and options are recognised as a
deduction from equity.
Where share capital recognised as equity is repurchased, the amount of the consideration paid, including
directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classimed as
treasury shares and are presented in reserve for own shares account. Where treasury shares are subsequently
reissued, sold or cancelled, the consideration received is recognised as an increase in equity, and the
resulting surplus or demcit on the transaction is presented in non-distributable capital reserve.
2.10 Development properties for sale and stocks
Development properties for sale and stocks are stated at the lower of cost plus, where appropriate, a portion
of the attributable promt (note 2.15), and estimated net realisable value, net of progress billings. Net realisable
value represents the estimated selling price less costs to be incurred in selling the property.
The cost of properties under development comprises specimcally identimed costs, including acquisition
costs, development expenditure, borrowing costs and other related expenditure. Borrowing costs payable
on loans funding a development property are also capitalised, on a specimc identimcation basis, as part of
the cost of the development property until the completion of development.
