tomypak holdings berhad annual report 2012 - Announcements ...

ANNUAL REPORT 2012 pg 64
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Notes to the Financial Statements (Cont’d)
2. Significant accounting policies (Cont’d)
(d) Property, plant and equipment (Cont’d)
(iii) Depreciation
(e) Leased assets
Depreciation is based on the cost of an asset less its residual value. Significant components
of individual assets are assessed, and if a component has a useful life that is different from the
remainder of that asset, then that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of each component of an item of property, plant and equipment. 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 for the current and comparative periods are as follows:
Leasehold land 40 years
Building 40 years
Plant and machinery 2.5 - 15 years
Office equipment, furniture and fittings 4 - 10 years
Motor vehicles 5 years
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period
and adjusted as appropriate.
(i) Finance lease
TOMYPAK HOLDINGS BERHAD
Leases in terms of which the Group or the Company assume substantially all the risks and
rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset
is measured at an amount equal to the lower of its fair value and the present value of the minimum
lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with
the accounting policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance
expense and the reduction of the outstanding liability. The finance expense is allocated to each
period during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability. Contingent lease payments are accounted for by revising the minimum
lease payments over the remaining term of the lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment.