Lion Brewery (Ceylon) PLC Annual Report 2011 - Carson and ...

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Notes to the Financial Statements contd.
2.5.1 Assessment of Impairment
The Company assesses at each Balance Sheet date whether there is objective evidence that an asset or portfolio of
assets is impaired. The recoverable amount of an asset or cash generating unit is the greater of its value in use and
its fair value less cost to sell.
In assessing value in use, the estimated future cash flows are discounted to present value using appropriate
discount rates that reflects the current market assessments of the time value of money and risks specific to the
asset.
2.5.2 Employee Retirement Benefits
The liability as at Balance Sheet date was actuarially valued based on the assumptions set out in Note No 21 to
these Financial Statements.
3. Significant Accounting Policies
The accounting policies set out below have been applied by the Company consistent with the previous year.
3.1 Foreign Currency Transactions
All foreign currency transactions are converted at the rate of exchange prevailing at the time the transactions were
effected. Monetary assets and liabilities denominated in foreign currencies have been translated to Sri Lankan
rupees at rates of exchange prevailing at the Balance Sheet date. The exchange differences arising there from have
been dealt within the Income Statement.
Assets and Bases of Their Valuation
Assets classified as Current Assets in the Balance Sheet are cash and those which are expected to be realised in
cash during the normal operating cycle of the Company’s business or within one year from the Balance Sheet date
whichever is shorter. Assets other than Current Assets are those which the Company intends to hold beyond a
period of one year from the Balance Sheet date.
3.2 Property, Plant & Equipment
(a) Recognition and Measurement
Items of property, plant & equipment are measured at cost or valuation less accumulated depreciation and
accumulated impairment loss , if any, provided on the basis stated in Note No 12. Cost of property, plant &
equipment is the cost of acquisition or construction together with any expenses incurred in bringing the asset to its
working condition for its intended use.
The Company applies the revaluation model for freehold land and buildings while cost model is applied for other
categories of Property, Plant and Equipment.
Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means
of which to carry on the business or to increase the earning capacity of the business has been treated as capital
expenditure.
(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 reliably. All
other expenditure is recognised in the Income Statement as and when an expense is incurred.