Operations Review - ChartNexus

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Property, plant and equipment
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Property, plant and equipment are tangible items that:
I. are held for use in the production or supply of goods or services, or for administrative
purposes; and
II. are expected to be used during more than one period.
(i) Cost
Property, plant and equipment are initially stated at cost. Cost includes expenditure that is
directly attributable to the acquisition of the items and bringing them to the location and
condition so as to render them operational in the manner intended by the Group. The Group
allocates the initial cost of an item of property, plant and equipment to its significant
component parts.
A piece of freehold land held by the Group is stated at the Directors’ valuation based on a 1983
independent professional valuation of the open market value of the land on an existing
use basis. The surplus arising on revaluation was credited directly to capital reserves and
subsequently utilised.
The Group has adopted the transitional provision of FRS 116 which allows the freehold land
to be stated at the amount revalued on 5 September 1983. All other land held by the Group is
stated at cost.
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. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to
the income statement during the financial period in which they are incurred.
(ii) Depreciation
Freehold land is not depreciated as it has an infinite life. Depreciation of other property, plant
and equipment is provided for on a straight line basis to write off the cost or valuation of each
asset to its residual value over their estimated useful lives. The assets’ residual values, useful
lives and depreciation method are reviewed annually and revised if appropriate.
The principal estimated useful lives of depreciation used are as follows:
Buildings 15-50 years
Plant and machinery 5-15 years
Office equipment, furniture, fittings and vehicles 2-8 years