51
Annual Report 2015
TEHO INTERNATIONAL INC LTD.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.4 Property, plant and equipment (cont’d)
(i) Recognition and measurement (cont’d)
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Purchased software that is integral to the functionality of the related equipment is
capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives,
they are accounted for as separate items (major components) of property, plant and
equipment.
The gain or loss on disposal of an item of property, plant and equipment (calculated
as the difference between the net proceeds from disposal and the carrying amount of
the item) is recognised in profit or loss.
Upon disposal of leasehold building, any related revaluation reserve is transferred
from the revaluation reserve to retained earnings and is not taken into account in
arriving at the gain or loss on disposal.
(ii) Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is
recognised in the carrying amount of the item if it is probable that the future economic
benefits embodied within the component will flow to the Group, and its cost can be
measured reliably. The carrying amount of the replaced component is derecognised.
The costs of the day-to-day servicing of property, plant and equipment are recognised
in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant
components of individual assets are assessed and if a component has a useful life
that is different from the remainder of that asset, that component is depreciated
separately.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.4 Property, plant and equipment (cont’d)
(iii) Depreciation (cont’d)
Depreciation is recognised as an expense in profit or loss on a straight-line basis
over the estimated useful lives of each component of an item of property, plant and
equipment, unless it is included in the carrying amount of another asset. Leased
assets are depreciated over the shorter of the lease term and their useful lives unless
it is reasonably certain that the Group will obtain ownership by the end of the lease
term. Assets under construction are not depreciated.
Depreciation is recognised from the date that the property, plant and equipment are
installed and are ready for use, or in respect of internally constructed assets, from the
date that the asset is completed and ready for use.
The estimated useful lives for the current and comparative years are as follows:
Leasehold buildings
–
Over the terms of lease that are 37 to 44 years
Plant and machinery
–
5 to 10 years
Motor vehicles
–
5 years
Depreciation methods, useful lives and residual values are reviewed at the end of
each reporting period and adjusted if appropriate.
3.5 Intangible assets and goodwill
(i) Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible
assets. For the measurement of goodwill at initial recognition, see note 3.1(i).
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of
associates, the carrying amount of goodwill is included in the carrying amount of the
investment, and an impairment loss on such an investment is not allocated to any
asset, including goodwill, that forms part of the carrying amount of the associates.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
