Consolidated Profit And Loss Account (Page 12 of 48) in pdf

NOTES TO THE ACCOUNTS

Foreign currencies

Foreign currency transactions during the year are translated into Hong Kong dollars at exchange rates

ruling at the transaction dates. Monetary foreign currency balances and the balance sheets of overseas

subsidiaries and associates are translated into Hong Kong dollars at the rates of exchange ruling at the

balance sheet date. The profit and loss accounts of overseas subsidiaries are translated into Hong Kong

dollars at the average exchange rate for the year. Differences on foreign currency translation are dealt

with in the profit and loss account with the exception of those arising on the translation of the accounts

of overseas subsidiaries and associates which are dealt with in capital reserves. On disposal of an

overseas subsidiary or associate, the cumulative amount of the exchange difference which related to

that overseas subsidiary or associate is included in the calculation of the profit and loss on disposal.

Gains or losses on outstanding forward contracts computed by reference to the forward rates at the

balance sheet date are dealt with in the profit and loss account. Gains and losses on forward contracts

entered into as hedges against net investments in overseas subsidiaries and associates are offset as

reserve movements against the exchange difference arising on the retranslation of the net investments.

Assets held for use in operating leases

Where the Group leases out assets under operating leases, the assets are included in the balance sheet

according to their nature and, where applicable, are depreciated in accordance with the Group’s

depreciation policies, as set out in note 1(e) above. Revenue arising from operating leases is recognised

in accordance with the Group’s revenue recognition policies, as set out in note 1(k)(i) below.

Recognition of revenue

(i)

Rental income under operating leases is recognised in the profit and loss account in equal

instalments over the accounting periods covered by the lease term, except where an alternative

basis is more representative of the pattern of benefits to be derived from the leased asset. Lease

incentives granted are recognised in the profit and loss account as an integral part of the aggregate

net lease payments receivable. Contingent rentals are recognised as income in the accounting

period in which they are earned.

(ii)

Income from sale of completed property is recognised upon completion of the sale and purchase

agreement and income from pre-sale of property under development for sale is recognised using

the stage of completion method for contracts entered into before 1 January 2005, while

completion method is adopted for contracts entered into on or after 1 January 2005 (see

note 1(d)(ii)).

Wheelock and Company Limited Annual Report 2004/05

Consolidated Profit And Loss Account Page 12