Annual Report 2009/2010 - Colombo Stock Exchange

NOTES TO THE FINANCIAL STATEMENTS
(b) Revaluation of Land and Buildings
The freehold land and buildings of the Company have
been revalued and revaluation of these assets are
carried out at least once every five years in order to
ensure that the book values reflect the realisable values.
Any surplus or deficit arising there from is adjusted in
the revaluation reserve.
(c) Subsequent Expenditure
Expenditure incurred to replace a component of
an item of property, plant and equipment that is
accounted for separately is capitalised. Other
subsequent expenditure is capitalised only if it is
probable that the future economic benefits
embodied with the item will flow to the Company
and the cost of the item can be measured
reliable. All other expenditure is recognised
in the income statement as an expense as incurred.
(d) Depreciation
Depreciation is provided on a straight-line basis over
the periods appropriate to the estimated
useful lives of different types of assets, at
varying rates specified on their costs or revalued
amounts are as follows:
%
Freehold buildings 2
Plant & machinery 5 - 10
Furniture & fittings 10
Office equipment 10 - 33.33
Computer equipment 33.33
Computer equipment-software 20
Motor vehicles 20 - 25
Laboratory equipment 25
Assets are depreciated from the month of
purchase up to the month of disposal.
No depreciation is provided on freehold land.
(e) Capital Work - in- Progress
The cost of self constructed assets includes the cost of
materials and direct labour, any other costs directly
attributable to bringing the assets to a workable
condition of their intended use and capitalised
borrowing cost ( see below) . Capital Work-In-Progress
is transferred to the respective asset accounts when the
asset is available for use.
The Company capitalises borrowing costs directly
attributable to the acquisition, construction or
production of a qualifying asset as part of the cost of
that asset. The Company has capitalised borrowing
costs with respect to capital work in progress.
(f) Impairment of Property, Plant and
Equipment
The carrying value of property, plant and
equipment is reviewed for impairment when
events or changes in circumstances indicate the
carrying value may not be recoverable. If any
such indication exists and where the carrying
value exceed the estimated recoverable amount
the assets are written down to their recoverable
amount. Impairment losses are recognised in the
Income Statement unless it reverses a previous
revaluation surplus for the same asset.
3.3 Intangible Assets - Computer Application
Software
All software licensed for use by the Company, not
constituting an integral part of related hardware
are included in the Balance Sheet under the
category of Intangible Assets and carried at cost
less accumulated amortisation and accumulated
impairment losses, if any.
The initial acquisition cost comprises license
fee paid at the inception, import duties, nonrefundable
taxes and levies, cost of customising
the software to meet the specific requirements
of the Company and other directly attributable
expenditure in preparing the asset for its
intended use.
The initial cost is enhanced by subsequent
expenditure incurred by further customisation
to meet ancillary transaction processing and
reporting requirements tailor-made for the use of the
Company constituting an improvement to the
software.
The cost is amortised using the straightline
method, at the rate of 20% per annum
commencing from the date the application
software is available for use. The amortised
amount is based on the best estimate of its
useful life and the amortisation cost is recognised
as an expense in the Income Statement.
3.4 Inventories
Inventories are recognised at cost or net
realisable value whichever is lower after making
due allowance for obsolete and slow moving items.
Actual breakages of bottles are removed from
inventory and recognised as an expense in the
income statement.
The cost of each category of inventory is derived on
the following bases:
Fi n a n c i a l S t a t e m e n t s
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