Better Land Company Limited (BLC) is a Hong Kong company with several subsidiaries operating mainly in the waste management and disposal industry. BLC was incorporated in 1981 and has grown to become one of the top four waste management companies in Hong Kong. The business was started by the Wongs family, but currently no family members are actively involved in the management of the company despite their ownership of BLCs ordinary shares. In 2018, the Wong family decided that they would begin the process of selling the company over the next two or three years. In preparation for the sale, the company has engaged your firm, Lo and Partners, to audit the companys financial statements. BLC has an August 31 year-end. It is now September 18, 2020, and your firm is conducting the audit of BLC for the year ended August 31, 2020. You are reviewing the files of BLC and you noted the following events:

BLC bids on various government waste pickup and disposal contracts. BLC buys waste disposal sites to dump the waste collected. BLC defers and amortises the cost of the sites over the expected useful lives of the sites, using different amortisation bases including tonnes of capacity, years of remaining usage, or cubic metres of waste capacity. Amortisation of the cost of these sites represents 41% of BLCs operating expenses.