HK Profits Tax - Change of intention, Revenue vs Captial in nature

Captial asset to trading stock:
When a company reclassifies the fixed asset to current asset in the balance sheet, it is a change of intention on the use of the asset;

At the date of change of intention, the fixed asset is no more captial asset, but a trading stock, and the market value of the asset would be at the date of change of intention;

The business is deemed to have sold a capital asset and purchases a trading stock on the date of change of intention;

The asssible profit on the sale of the asset is the excess of the sales proceed of the trading stock over the market value on the date of change of intention;


Trading stock to capital asset:
The business is deemed to have sold that particular trading stock and purchase a capital asset on the date of change of intention, although there has not been any receipt of sales proceed;

The taxable amount is the excess of the market value on the date of change of intention over its historical cost according to the rule of Sharkey v. Wernher;