NOTES TO FINANCIAL STATEMENTS
30 June 2015
Annual Report 2015
Karin Technology Holdings Limited
65
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
INVESTMENT PROPERTIES
Investment properties are interests in land and buildings (including the leasehold interest under an operating
lease for a property which would otherwise meet the definition of an investment property) held to earn rental
income and/or for capital appreciation, rather than for use in the production or supply of goods or services or
for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially
at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair
value, which reflects market conditions at the end of the reporting period.
Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in
the year in which they arise.
Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in
the year of the retirement or disposal.
LEASES
Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than
legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset
is capitalised at the present value of the minimum lease payments and recorded together with the obligation,
excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases
are included in property, plant and equipment, and depreciated over the shorter of the lease terms and the
estimated useful lives of the assets. The finance costs of such leases are charged to profit or loss so as to provide
a constant periodic rate of charge over the lease terms.
Assets acquired through hire purchase contracts of a financing nature are accounted for as finance leases, but
are depreciated over their estimated useful lives.
Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted
for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are
included in non-current assets, and rentals receivable under the operating leases are credited to profit or loss
on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under operating
leases net of any incentives received from the lessor are charged to profit or loss on the straight-line basis over
the lease terms.
Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on
the straight-line basis over the lease terms. When the lease payments cannot be allocated reliably between the
land and buildings elements, the entire lease payments are included in the cost of the land and buildings as a
finance lease in property, plant and equipment.
