notes to the
financial statements
31 December 2015
2.
Summary of significant accounting policies (cont’d)
Property, plant and equipment (cont’d)
The gain or loss arising from the derecognition of an item of property, plant and equipment is measured as the difference
between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in profit or loss.
The residual value, useful life and depreciation method of an asset are reviewed at least at the end of each reporting
period and, if expectations differ significantly from previous estimates, the changes are accounted for as a change in
an accounting estimate, and the depreciation charge for the current and future periods are adjusted.
Leases
Whether an arrangement is, or contains, a lease, it is based on the substance of the arrangement at the inception date, that
is, whether (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets; or (b) the arrangement
conveys a right to use the asset.
Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All
other leases are classified as operating leases. At the commencement of the lease term, a finance lease is recognised as
an asset and as a liability in the statement of financial position at amounts equal to the fair value of the leased asset or, if
lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate
used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is not
practicable to determine, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added
to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as
finance charges which are allocated to each reporting period during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the reporting periods
in which they are incurred. The assets are depreciated as owned depreciable assets over the shorter of the estimated
useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the
end of the lease term.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are
classified as operating leases. For operating leases, lease payments are recognised as an expense in profit or loss on a
straight-line basis over the termof the relevant lease unless another systematic basis is representative of the time pattern of
the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in profit or loss as an
integral part of the total lease expense. Rental income fromoperating leases is recognised in profit or loss on a straight-line
basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s
benefit, even if the payments are not on that basis. Initial direct cost incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
Intangible assets
An identifiable non-monetary asset without physical substance is recognised as an intangible asset at acquisition cost
if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group
and the cost of the asset can be measured reliably. After initial recognition, an intangible asset with finite useful life
is carried at cost less any accumulated amortisation and accumulated impairment losses. Intangible assets with finite
useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication
that the intangible assets may be impaired. Intangible assets with indefinite useful lives or not yet available for use are
tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying amounts
may be impaired individually or at the cash-generating unit level. An intangible asset with an indefinite useful life is not
amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether
the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis. An intangible asset is regarded as having an indefinite useful life when, based on an analysis of
all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net
cash inflows for the Group.
• e x p e r i e n c i n g
k i n g s m e n
5 8
