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2. SigniFiCAnt ACCounting PoliCieS (Cont’D)
2.2 Summary of significant accounting policies (cont’d)
(e) Property, plant and equipment and depreciation (cont’d)
Depreciation of other 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, at the following annual rates:
Vessels and related dry docking, remote operated vehicles (“ROVs”)
and Saturation Diving System (“SAT System”) 4% - 20%
Tender assisted drilling rigs and related dry docking, and plant and machinery 3 1/3% - 50%
Other equipments, tools and implements 20% - 33 1/3%
Furniture, equipments and vehicles 14% - 50%
The residual values, useful life and depreciation method are reviewed at each financial 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 benefits 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 benefits are expected
from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised
in profit or loss and the unutilised portion of the revaluation surplus on that item is taken directly to retained profits.
(f) Construction contracts
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised
as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by
reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.
Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of
contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period for
which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
When the total of costs incurred on construction contracts plus recognised profits (less recognised losses) exceed progress
billings, the balance is classified as amount due from customers on contract. When progress billings exceed costs incurred
plus recognised profits (less recognised losses) the balance is classified as amount due to customers on contracts.
(g) impairment of non-financial assets
The carrying amounts of assets, other than construction contract assets, inventories and deferred tax assets are reviewed
at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated to determine the amount of impairment loss.
For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are
identified.
For the purpose of impairment testing of these assets, the recoverable amount is determined on an individual asset basis
unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case,
recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs to. Goodwill acquired in
a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group
are assigned to those units or groups of units.
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SapuraCrest Petroleum Berhad
Annual Report 2010