TANJUNG OFFSHORE BERHAD

NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2009
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Subsidiary Companies (continued)
75
TANJUNG OFFSHORE BERHAD (662315-U)
ANNUAL REPORT 2009
Investment in subsidiary companies which is eliminated on consolidation is stated in the Company’s fi nancial statements
at cost less impairment losses. The policy for the recognition and measurement of impairment losses are in accordance
with Note 3(h) to the fi nancial statements.
e) Associate Company
An associate company is defi ned as an investment where the Group holds for long-term purposes between 20% to 50%
of the issued equity share capital of the investee’s company, and exercises signifi cant infl uence but not control, over the
investee’s company management.
Investment in associate company is accounted for in the consolidated fi nancial statements using the equity method of
accounting based on the management fi nancial statements of the investee’s company made up to the end of the fi nancial
year.
f) Property, Plant and Equipment
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset, as appropriate, only when it is probably that future economic benefi ts
associated with the item will fl ow to the Group and the Company and the cost of the item can be measured reliably.
The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income
statement during the current fi nancial year in which they are incurred.
Subsequent to recognition, property, plant and equipment are stated at cost or valuation less accumulated depreciation
and any accumulated impairment losses.
Revaluations are made at least once in every fi ve years based on a valuation by an independent valuer on an open market
value basis. Any revaluation increase is credited to equity as revaluation surplus, except to the extent that it reverses a
revaluation decrease for the same asset previously recognised as an expense, in which case the increase is recognised
in the income statement to the extent of the decrease previously recognised. A revaluation decrease is fi rst offset against
unutilised previously recognised revaluation surplus in respect of the same asset and the balance thereafter recognised
as an expense.
Depreciation of property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to
its residual value over the estimated useful life as follows:
%
Vessels 5
Freehold land and building 2
Leasehold land and building Over 80 months or 50 years
Furniture and fi ttings 10
Renovation 10
Workshop tools 20
Offi ce equipment 10 – 33 1/3
Motor vehicles 20 – 25
Machinery 10 – 33 1/3
Depreciation of vessels and equipment under commissioning commences when the vessels and equipment are delivered
and ready for their intended use.
The residual values, useful life and depreciation method are reviewed at each fi nancial year end to ensure that the amount,
method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of
the future economic benefi ts embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are
expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount
is recognised in the income statement and the unutilised portion of the revaluation surplus on that item is take directly to
accumulated profi t.