CapitaLand Investment Limited - Annual Report 2021

161 CapitaLand Investment Limited 160 Annual Report 2021 Notes to the Financial Statements Notes to the Financial Statements 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.5 Intangible assets (continued) (a) Goodwill (continued) Goodwill arising from the acquisition of subsidiaries is included in intangible assets. Goodwill arising from the acquisition of associates and joint ventures is presented together with interests in associates and joint ventures. Goodwill is tested annually for impairment as described in note 3.11. (b) Other intangible assets Other intangible assets with finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. These are amortised in the profit or loss on a straight-line basis over their estimated useful lives of one to ten years, from the date on which the assets are available for use. Other intangible assets with indefinite useful lives are not amortised and are measured at cost less accumulated impairment losses. 3.6 Investment properties and investment properties under development Investment properties are properties held either to earn rental or for capital appreciation or both. Investment properties under development are properties being constructed or developed for future use as investment properties. Certain of the Group’s investment properties acquired through interests in subsidiaries, are accounted for as acquisition of assets (note 3.2(a)). Investment properties and investment properties under development are initially recognised at cost, including transaction costs, and subsequently at fair value with any change therein recognised in the profit or loss. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs. The fair value is determined based on internal valuation or independent professional valuation. Independent valuation is also carried out on occurrence of acquisition. When an investment property or investment property under development is disposed of, the resulting gain or loss recognised in the profit or loss is the difference between the net disposal proceed and the carrying amount of the property. Transfers to, or from, investment properties are made where there is a change in intent and use, evidenced by: • development with a view to sell, for a transfer from investment properties to development properties for sale; • commencement of leasing activities for a transfer from development properties for sale to investment properties; • commencement of owner-occupation, for a transfer from investment properties to property, plant and equipment; and • end of owner-occupation, for a transfer from property, plant and equipment to investment properties. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.7 Non-current assets and liabilities held for sale Non-current assets and liabilities, that are highly probable to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets are remeasured in accordance with the applicable SFRS(I). Thereafter, the assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Intangible assets and property, plant and equipment classified as held for sale are not amortised or depreciated. In addition, equity accounting of associates and joint ventures ceases once the investments are classified as held for sale. 3.8 Financial instruments (a) Non-derivative financial assets Classification and measurement The Group classifies its financial assets in the following measurement categories: • amortised cost; • fair value through other comprehensive income (FVOCI); and • fair value through profit or loss (FVTPL). The classification depends on the Group’s business model for managing the financial assets as well as the contractual terms of the cash flows of the financial assets. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. The Group reclassifies financial assets when and only when its business model for managing those assets changes. At initial recognition A financial asset is recognised if the Group becomes a party to the contractual provisions of the financial asset. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. At subsequent measurement (i) Financial assets at amortised cost Financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in interest income using the effective interest rate method.