2012 TPSEA Annual Report - Serena Hotels

Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
(f)
Property, plant and equipment
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 profit or loss during the financial
period in which they are incurred
Depreciation on 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:
Land and buildings
Computers
Motor vehicles
Furniture and fittings
Lift installations
Laundry equipment
Over the period of the lease
3 - 4 years
4 years
10 years
10 years
10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
During 2011 the useful lives of furniture and fittings were revised from eight to ten years. This will result in
comparatively lower depreciation charge to the income statement in future periods. The impact in the current year
is Shs 46 Million.
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 profit or loss. On disposal of revalued assets, amounts in the revaluation surplus relating to that
asset are transferred to retained earnings
(g)
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the
consideration transferred over the Company’s interest in net fair value of the net identifiable assets, liabilities and
contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs,
or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to
which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the operating segment level.
50 TPS EASTERN AFRICA LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2011