Download TPS, East Africa 2008 Annual Report - Serena Hotels

2 Summary of significant accounting policies (continued)
(f) Property, plant and equipment
Notes to the Financial Statements (cont’d)
All categories of property, plant and equipment are initially recorded at cost. Buildings are subsequently shown at fair
value, based on periodic, but at least every five year, valuations by external independent valuers, less subsequent
depreciation for buildings. All other property, plant and equipment is stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the profit and loss account during the
financial period in which they are incurred.
Increases in the carrying amount arising on revaluation are credited to a revaluation surplus reserve in equity. Decreases
that offset previous increases of the same asset are charged against the revaluation surplus; all other decreases are
charged to the profit and loss account. Each year the difference between depreciation based on the revalued carrying
amount of the asset (the depreciation charged to the profit and loss account) and depreciation based on the asset's
original cost is transferred from the revaluation surplus to retained earnings.
Freehold land is not depreciated. Depreciation on other assets is calculated using the straight line method to write
down their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
Buildings Over the period of the lease
Computers 3 - 4 years
Motor vehicles 4 years
Furniture and fittings 8 years
Lift installations 10 years
Laundry equipment 10 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its estimated recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount
and are included in the profit and loss account. On disposal of revalued assets, amounts in the revaluation surplus
relating to that asset are transferred to retained earnings.
(g) Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net
identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in
associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains
and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating
units represents the Group's investment in each country of operation by each reporting segment.
TPS EASTERN AFRICA LIMITED | ANNUAL REPORT AND FINANCIAL STATEMENTS 2008 35