NOTES TO THE CONSOLIDATED FINANCIAL  STATEMENTS  (RMB AND US$ AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)  2.  Basis of preparation and accounting policies (cont’d) 2.5  Standards issued but not yet effective (cont’d) Annual Improvements to IFRS (a) IFRS 8  Operating Segments (b) IAS 24  Related Party Disclosures 3.  Significant accounting judgments, estimates and assumptions 3.1 Judgments Operating lease commitments – Group as lessor Cash and cash equivalents These improvements, which are applicable to the Group, include: This improvement clarifies that operating segments may be combined/aggregated if they are consistent  with the core principle of the standard, if the segments have similar economic characteristics and if they are  similar in other qualitative respects. If they are combined, the entity must disclose the economic characteristics  (e.g., sales and gross margins) used to assess whether the segments are ‘similar’. This improvement also  clarifies reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is  reported to the chief operating decision maker, similar to the required disclosure for segment liabilities. This  improvement is to be applied retrospectively for annual periods beginning on or after July 1, 2014. The amendment clarifies that a management entity – an entity that provides key management personnel  services – is a related party subject to the related party disclosures. In addition, an entity that uses a  management entity is required to disclose the expenses incurred for management services. The amendment is  to be applied retrospectively for annual periods beginning on or after July 1, 2014. The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates  and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying  disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result  in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. In the process of applying the Group’s accounting policies, management has made the following judgments, which  have the most significant effect on the amounts recognized in the consolidated financial statements: The Group has leased out some of its assets, including surplus office and manufacturing buildings. The Group has  determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not  constituting a substantial portion of the economic life of the commercial property, that it retains all the significant risks  and rewards of ownership of these properties and accounts for the contracts as operating leases. The Group’s cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than  for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a  known amount of cash and be subject to an insignificant risk of changes in value. To determine whether a fixed deposit  meets the definition of cash and cash equivalents, the Group considers factors such as its intention to hold the fixed  deposit to meet short-term cash requirements and maturity and terms of such deposit. The carrying amount of cash  and cash equivalents as at December 31, 2012 and 2013 are disclosed in Note 21. China Yuchai International Limited | Annual Report 2013 64