Page 40 - TreasuryChinaTrust

Treasury China Trust Annual Report 2010 57

NOTES TO THE FINANCIAL STATEMENTS

Period from 19 May 2010 (date of constitution) to 31 December 2010

1 Domicile and activity (Continued)

Other fees

Pursuant to the Trust Deed, the Trustee-Manager is entitled to the following:

• An acquisition fee amounting to 1.0% of (i) the value of the underlying real estate (after deducting the interest of any third party co-owners or co-participants) purchased by the Trustee-Manager on behalf of the Trust, whether directly or indirectly; or (ii) the acquisition price of any other asset forming a part of the Trust Property acquired by the Trustee-Manager on behalf of the Trust. No acquisition fee is payable on the acquisition of the initial portfolio of properties. Any payment to third party agents or brokers in connection with the acquisition of any asset of the Trust shall be paid by the Trustee-Manager to such persons out of the Trust Property of the Trust or the assets of the relevant special purpose vehicle, and not out of the acquisition fee received or to be received by the Trustee-Manager.

• A divestment fee amounting to 0.5% of (i) the value of the underlying real estate (after deducting the interest of any third party co-owners or co-participants) sold or divested by the Trustee-Manager on behalf of the Trust, whether directly or indirectly; or (ii) the sale price of any other asset forming a part of the Trust Property sold or divested by the Trustee-Manager on behalf of the Trust. Any payment to third party agents or brokers in connection with the divestment of any asset of the Trust shall be paid by the Trustee-Manager to such persons out of the Trust Property of the Trust or the assets of the relevant special purpose vehicle, and not out of the divestment fee received or to be received by the Trustee-Manager.

The Trustee-Manager may elect to receive all or any part of the acquisition fee and divestment fee in Units instead of cash.

2 Basis of preparation

(a) Statement of compliance

The financial statements have been prepared in accordance with the provisions of the Singapore Business Trusts Act, Chapter 31A (the Act) and the Singapore Financial Reporting Standards (“FRS”).

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis, except otherwise disclosed below.

(c) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the “functional currency”). The consolidated financial statements of the Group are presented in Singapore dollars, which is the functional currency of the Trust.

All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of financial statements in conformity with FRSs requires the Trustee-Manager to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods effected.