Page 62 - UBF AR 2018 - E Version
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NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 March 2018
Impairment losses on equity investments are not Contingent rents are recognized as revenue in the
reversed through the income statement; increases in period in which they are earned.
the fair value after impairment are recognized in other 3.9 Real Estate Property
comprehensive income. Property acquired or being constructed for sale in the
The Company writes-off certain Available for Sale ordinary course of business, rather than to be held for
financial investments when they are determined to be rental or capital appreciation, is held as real estate
uncollectible. property and is measured at the lower of cost and net
3.8 Leasing realizable value.
The determination of whether an arrangement is a lease, Cost includes:
or it contains a lease, is based on the substance of the • Freehold rights for land
arrangement and requires an assessment of whether • Amounts paid to contractors for developments
the fulfilment of the arrangement is dependent on the • Borrowing costs, planning and design costs, costs of
use of a specific asset or assets and the arrangement site preparation, professional fees for legal services,
conveys a right to use the asset. property transfer taxes, construction overheads and
Finance Lease other related costs,
Finance leases – Company as a lessee Non refundable commissions paid to sales or marketing
Finance leases that transfer to the Company agents on the sale of real estate units are expensed
substantially all of the risks and benefits incidental when paid.
to ownership of the leased item, are capitalized at Net realizable value is the estimated selling price in the
the commencement of the lease at the fair value of ordinary course of the business, based on market prices
the leased property or, if lower, at the present value at the reporting date and discounted for the time value
of the minimum lease payments. Lease payments are of money if material, less costs to completion and the
apportioned between finance charges and reduction estimated costs of sale.
of the lease liability so as to achieve a constant rate The cost of real estate property recognized in profit
of interest on the remaining balance of the liability. or loss on disposal is determined with reference to
Finance charges are recognized in finance cost in the the specific costs incurred on the property sold and
statement of profit or loss. an allocation of any non-specific costs based on the
Leased assets are depreciated over the useful life of the relative size of the property sold.
asset. However, if there is no reasonable certainty that 3.10 Property, Plant and Equipment
the Company will obtain ownership by the end of the Recognition and Measurement
lease term, the asset is depreciated over the shorter Property, plant and equipment are recognized if it is
of the estimated useful life of the asset and the lease probable that future economic benefits associated with
term. the assets will flow to the Company and cost of the
Finance leases – Company as a lessor asset can be reliably measured.
When the Company is the lessor under finance leases Items of property, plant and equipment are measured
the amounts due under the leases, after deduction of at cost/ revaluation less accumulated depreciation and
unearned charges, are included in “Rentals receivable accumulated impairment losses.
on leased assets”. The finance income receivable is Cost includes expenditure that is directly attributable
recognized in ‘interest income’ over the periods of the to the acquisition of the asset. The cost of self-
leases so as to give a constant rate of return on the net constructed assets includes the cost of materials and
investment in the leases. direct labour, any other costs directly attributable
Operating Lease to bringing the asset to a working condition for their
Leases that do not transfer substantially all the risks intended use, the costs of dismantling and removing the
and benefits incidental to ownership of the leased items items and restoring the site at which they are located
to the lessee are operating leases. and capitalized borrowing costs.
Operating leases – Company as a lessee Purchased software that is integral to the functionality
Operating lease payments are recognized as an expense of the related equipment is capitalized as part of that
in the statement of profit or loss on a straight line equipment. When parts of an item of property, plant
basis over the lease term. Contingent rent payable is and equipment have different useful lives, they are
recognized as an expense in the period in which they accounted for as separate items of property, plant and
are incurred. equipment.
Operating leases – Company as a lessor The gain or loss on disposal of an item of property, plant
Initial direct costs incurred in negotiating operating and equipment is determined by comparing the proceeds
leases are added to the carrying amount of the leased from disposal with the carrying amount of the item of
asset and recognized over the lease term on the same property, plant and equipment, and is recognized in
basis as rental income. other income/other expenses in profit or loss.
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UB Finance
