ANNUAL REPORT 2014
57
NOTES TO THE
FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(d) Property, plant and equipment (continued)
(iii) Depreciation (continued)
The estimated useful lives for the current and comparative periods are as follows:
l
long term leasehold land
64 - 80 years
l
buildings
20 - 25 years
l
plant, machinery and equipment
1 - 10 years
l
furniture, fittings and office equipment
2 - 7 years
l
motor vehicles
5 - 10 years
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period and
adjusted as appropriate.
(e) Leased assets
(i)
Finance leases
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards
of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at
an amount equal to the lower of its fair value and the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each period during
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability. Contingent lease payments are accounted for by revising the minimum lease payments over
the remaining term of the lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment,
or as investment property it held to earn rental income or for capital appreciation or for both.
(ii) Operating leases
Leases, where the Group does not assume substantially all the risks and rewards of the ownership
are classified as operating leases and, except for property interest held under operating lease, the
leased assets are not recognised on the Group’s statement of financial position.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of
the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in
the reporting period in which they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
(f)
Intangible assets
(i)
Research and development expenditure
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in profit or loss as incurred.
