106 / 160
for the year ended 30 June 2016
Hyprop Investments Limited
Group annual financial statements 2016
104
NOTES TO THE FINANCIAL STATEMENTS
continued
1.
Accounting policies and presentation of financial statements
continued
1.8 Investments in associates and joint ventures
An associate is an entity over which the company can exercise significant influence, through participation in the financial and operating policy
decisions of the investee, but where it does not have control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint
arrangement.
The results, assets and liabilities of associates and joint ventures are incorporated in the financial statements using the equity method of
accounting, except when the investment is classified as held-for-sale, in which case it is accounted for in accordance with IFRS 5.
Under the equity method, the investment is initially recorded at cost and thereafter the carrying value is adjusted to recognise the investor’s
share of the post-acquisition profits or losses of the investee after the date of acquisition, distributions received and any adjustments
that are required. The profits or losses are recognised in the statement of profit or loss and other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment.
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an
associate or a joint venture.
If the interest that the company has in the joint venture provides the company with a contractual right to receive dividends, the investment
is accounted for as a financial instrument and will not be equity accounted.
Refer to note 1.12 – Financial instruments
.
When the reporting period of the investor is different to that of the associate or joint venture, the associate or joint venture prepares for the
use of the investor, financial statements as at the same date as the financial statements of the investor.
Where a group entity transacts with an associate or joint venture of the group, profits and losses are eliminated to the extent of the group’s
interest in the relevant associate or joint venture.
1.9 Building appurtenances and tenant installations
Building appurtenances and tenant installations are carried at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is provided on all building appurtenances and tenant installations to write down the cost, less residual value, by equal instalments
over their useful lives as follows:
•
•
Tenant installations – period of lease
•
•
Building appurtenances – three to fifteen years.
Subsequent expenditure is capitalised when it is probable that future economic benefits will flow to the group and its cost can be reliably
measured. All other expenditure is recognised as an expense in the period in which it is incurred. Gains and losses on the disposal of building
appurtenances and tenant installations are recognised in profit or loss and are calculated as the difference between the price and the carrying
value of the item sold.
1.10 Investment property
Investment property includes land, buildings and development rights and are held to earn income and/or for capital appreciation.
Investment property is initially recognised at cost including transaction costs. Cost includes initial costs, costs incurred subsequently to
extend or refurbish investment property as well as the cost of any development rights.
Investment property is subsequently measured at fair value as determined on a semi-annual basis by an independent registered valuer. The
valuations are done on an open-market basis and valuers use the discounted cash flow method. Gains or losses arising from changes in fair
value, after deducting the straight-line lease income adjustment, are included in net profit or loss for the period in which they arise. These
gains or losses are transferred to non-distributable reserves in the statement of changes in equity.
In instances when investment property is sold, but not yet transferred to the purchaser at year-end, the fair value is determined as the sale
price.
Realised gains or losses arising on the disposal of investment properties are recognised in profit or loss for the year and transferred to
non-distributable reserves in the statement of changes in equity.