Page 81 - Annual Report

HONG KONG ACADEMY OF MEDICINE
香 港 醫 學 專 科 學 院
香港醫學專科學院
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

d) Property, plant and equipment (Continued)

Construction in progress include property, plant and equipment in the course of construction for
production, supply or administrative purposes are carried at cost, less any recognised
impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Academy’s accounting policy. Such properties, plant and
equipment are classified to the appropriate categories of property, plant and equipment when
completed and ready for intended use. Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready for their intended use.

e) Leases

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. Control is conveyed where the
customer has both the right to direct the use of the identified asset and to obtain substantially all
of the economic benefits from that use.

As a lessor

When the Group acts as a lessor, it determines at lease inception whether each lease is a
finance lease or an operating lease. A lease is classified as a finance lease if it transfers
substantially all the risks and rewards incidental to the ownership of an underlying assets to the
lessee. If this is not the case, the lease is classified as an operating lease. When a contract
contains lease and non-lease components, the Group allocates the consideration in the contract
to each component on a relative stand-alone selling price basis. The rental income from
operating leases is recognised in accordance with note 2(n). When the Group is an intermediate
lessor, the sub-leases are classified as a finance lease or as an operating lease with reference
to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to
which the Group applies the exemption, then the Group classifies the sub-lease as an operating
lease.

f) Inventories

Inventories are carried at the lower of cost and net recognised value. Cost is calculated using
the weighted average method.

Net recognised value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognised as an
expense in the period in which the related revenue is recognised. The amount of any write-down
of inventories to net recognised value and all losses of inventories are recognised as an
expense in the period the write-down or loss occurs. The amount of any reversal of any
write-down of inventories is recognised as a reduction in the amount of inventories recognised
as an expense in the period in which the reversal occurs.

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香港醫學專科學院 2024 年度報告