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Notes to the Consolidated Financial Statements

31st March 2017

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.7 Investment properties

Investment property, principally comprising leasehold land and buildings, is held for long-
term rental yields or for capital appreciation or both, and that is not occupied by the Group. It
also includes properties that are being constructed or developed for future use as investment
properties. Land held under operating leases are accounted for as investment properties when
the rest of the definition of an investment property is met. In such cases, the operating leases
concerned are accounted for as if they were finance leases. Investment property is initially
measured at cost, including related transaction costs and where applicable borrowing costs.
After initial recognition, investment properties are carried at fair value, representing open market
value determined at each reporting date by external valuers. The market value of the properties is
calculated on the discounted net rent income allowing for reversionary potential. Changes in fair
values are recorded in the consolidated income statement as part of “other income”. Gains and
losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised in the consolidated income statement.

2.8 Intangible assets

(a) Acquired licence right

An acquired licence right is carried at cost less accumulated amortisation. The economic
useful life of an acquired licence right is estimated at the time of purchase (Note 4(c)).

Amortisation is calculated using the straight-line method to allocate the cost of the acquired
licence right over its estimated useful life of 10 years.

Licence right is tested for impairment annually, in accordance with HKAS 36.

60 ALCO HOLDINGS LIMITED ANNUAL REPORT 2017