Consolidated Profit And Loss Account (Page 7 of 48) in pdf

NOTES TO THE ACCOUNTS

PRINCIPAL ACCOUNTING POLICIES

Statement of compliance

These accounts have been prepared in accordance with all applicable Hong Kong Financial Reporting

Standards (which include all applicable Statements of Standard Accounting Practice (“SSAPs”) and

Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”),

accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong

Companies Ordinance. These accounts also comply with the applicable disclosure provisions of the Rules

Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. A summary of the

principal accounting policies adopted by the Group is set out below.

Basis of preparation of accounts

The measurement basis used in the preparation of the accounts is historical cost modified by the

revaluation of investment properties and the marking to market of certain investments in securities as

explained in the accounting policies set out below.

Basis of consolidation

(i)

Subsidiaries and controlled companies

A subsidiary, in accordance with the Hong Kong Companies Ordinance, is a company in which the

Group, directly or indirectly, holds more than half of the issued share capital, or controls more than

half of the voting power, or controls the composition of the board of directors. Subsidiaries are

considered to be controlled if the Company has the power, directly or indirectly, to govern the

financial and operating policies, so as to obtain benefits from their activities.

An investment in a controlled subsidiary is consolidated into the consolidated accounts, unless it is

acquired and held exclusively with a view to subsequent disposal in the near future or operates

under severe long-term restrictions which significantly impair its ability to transfer funds to the

Group, in which case, it is stated in the balance sheet at fair value with changes in fair value

recognised in the same way as for investments in securities.

Intra-group balances and transactions, and any unrealised profits arising from intra-group

transactions, are eliminated in full in preparing the consolidated accounts. Unrealised losses

resulting from intra-group transactions are eliminated in the same way as unrealised profits, but

only to the extent that there is no evidence of impairment.

In the Company’s balance sheet, an investment in a subsidiary is stated at cost less any impairment

losses (see note 1 (f)), unless it is acquired and held exclusively with a view to subsequent disposal

in the near future or operates under severe long-term restrictions which significantly impair its

ability to transfer funds to the Company, in which case, it is stated at fair value with changes in fair

value recognised in the same way as for investments in securities.

Wheelock and Company Limited Annual Report 2004/05

Consolidated Profit And Loss Account Page 7