notes to the financial statements
for the financial year ended 31 December 2014 (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.7 Property, plant and equipment
(a)
Measurement basis
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The cost of property, plant and equipment initially recognised includes purchase price and any expenditure that is directly attributable to the acquisition
of the assets. Cost also includes borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. See
accounting policy 2.26 on borrowing costs. Items such as spare parts are recognised when they meet the definition of property, plant and equipment.
Otherwise, such items are classified as inventory. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and
equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.
Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with the asset will flow to
the Group and the Company and the cost of the asset can be measured reliably. The carrying amount of the replaced part is derecognised. All other
repair and maintenance costs are charged to the profit or loss during the financial year in which they are incurred.
At each reporting date, the Group and the Company assess whether there is any indication of impairment. Where an indication of impairment exists,
the carrying value of the asset is assessed and written down immediately to its recoverable amount. See accounting policy 2.15 on impairment of non-
financial assets.
Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from their use. Gains and losses
on disposals are determined by comparing proceeds with carrying amounts and are included in the profit or loss in the financial year the asset is
derecognised.
(b)
Depreciation
Freehold land is not depreciated as it has an indefinite life. Depreciation on capital work-in-progress commences when the assets are ready for their
intended use.
Depreciation is calculated to write off the depreciable amount of other property, plant and equipment on a straight line basis over their estimated useful
lives. The depreciable amount is determined after deducting residual value from cost. The estimated useful lives of the property, plant and equipment
are as follows:
Buildings
10 – 50 years
Plant, machinery, tools and equipment
2 – 25 years
Electrical installations, office equipment and
furniture and fittings
4 – 10 years
Computer equipment
3 – 10 years
Renovation and store extension
2 – 50 years
Motor vehicles
3 – 5 years
Assets under construction included in plant and equipment are not depreciated as these assets are yet to be available for use.
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each financial year.
72
Wah Seong Corporation Berhad • Annual Report 2014
