Investor Presentaiton
HKAS 1.51(a)
HKAS 1.49
HK Listco Ltd
Financial statements for the year ended 31 December 2023
19 INVENTORIES AND OTHER CONTRACT COSTS
2023
$'000
2022
$'000
Inventories
Electronic products
HKAS 2.36(b)
- Raw materials
- Work in progress
- Finished goods
- Goods in transit
41,555
44,008
33,675
23,253
43,727
32,166
9,658
3,323
-
Right to recover returned goods
1,345
1,125
129,960
103,875
Property development
- Land held for future development for sale
- Property under development for sale
12,025
10,340
115,943
103,344
127,968
113,684
HKAS 2.36(d)
(a)
Other contract costs 201
716
514
258,644
218,073
The analysis of the amount of inventories recognised as an expense and included in profit or loss is
as follows:
Carrying amount of inventories sold
HKAS 2.36(e)
HKAS 2.36(f)
Write down of inventories
Reversal of write-down of inventories
HKAS 2.36(g)
HKAS 1.29, 60, 66
201
2023
$'000
2022
$'000
774,748
708,796
12,794
10,574
(1,500)
786,042
719,370
The reversal of write-down of inventories made in prior years arose due to an increase in the
estimated net realisable value of certain electronic goods as a result of a change in consumer
preferences.
HKFRS 15 requires entities to separately recognise contract costs as assets provided that the capitalisation criteria in paragraphs
91 or 95 of HKFRS 15 are met, but does not specify where such assets should be presented in the statement of financial position.
Given this, the general HKAS 1 principles should be followed in respect of the current/non-current distinction (paragraph 66 of
HKAS 1) and materiality and aggregation (paragraphs 29 to 31 of HKAS 1).
In this illustration, HK Listco has presented the capitalised costs as current assets, aggregated in the same line item as inventories
on the face of the statement of financial position, with separate analysis in the notes. The capitalised contract costs satisfy the
criteria set out in paragraph 66 of HKAS 1 for classification as a current asset, as HK Listco's capitalised costs relate to the sale of
specific properties to be recognised during HK Listco's normal operating cycle. The costs are aggregated with inventories, as in
both cases the assets represent costs which are expected to be recognised in future periods in the statement of profit and loss as
expenses, as and when revenue from the sale of the related goods or services is recognised. Alternatively, the costs could be
presented as a separate line item on the face of the statement of financial position within current assets.
We would expect that in most cases classification as current assets will be appropriate, as in most cases the amounts will be
charged to profit or loss during the entity's normal operating cycle. An exception to this approach may be when the amortisation
period for the contract costs is an extended period which reflects the timing of goods or services to be transferred under a
specific anticipated contract (for example services to be provided over some extended future period after renewal of an existing
contract). In those cases, the contract costs may be closer in nature to intangible assets for customer relationships recognised in
a business combination and therefore presentation as a non-current asset may be more appropriate, if the amortisation period is
expected to extend beyond both 12 months and the entity's normal operating cycle. The classification as current or non-current
may therefore in some cases involves judgements based on an entity's facts and circumstances.
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