FY 2011 Annual Report - Sheng Siong

50 Sheng Siong Annual Report 2011
Notes to the Financial Statements
4 Significant accounting policies (Continued)
4.3 Property, plant and equipment
Recognition and measurement
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
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.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net
within other income in profit or loss.
Subsequent costs
The cost of replacing part 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 part will flow to the Group and
its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the
day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
Construction-in-progress is stated at cost. No depreciation is charged on construction-in-progress. Upon
completion of the construction-in-progress, the property, plant and equipment are transferred to the respective
property, plant and equipment categories and depreciated accordingly.
Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount
substituted for cost, less its residual value.
Except for construction in progress, depreciation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects
the expected pattern of consumption of the future economic benefits embodied in the 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.
The estimated useful lives are as follows:
Leasehold properties – 30 – 80 years
Renovations – 5 years
Plant and machinery – 5 years
Office equipment, furniture and fittings – 5 years
Motor vehicles – 5 years
Computers – 3 years
Cold room – 5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted as
appropriate.