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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Notes to the Financial Statements (Continued)
(i)
Intangible assets
Expenditure on acquired rights, patents, trademarks and licenses is capitalised and amortised using the
straight line method over their estimated useful lives. Intangible assets are not revalued.
(j)
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in the income statement as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for
the production of new or substantially improved products and processes, is capitalised if the product or
process is technically and commercially feasible and the Group has sufficient resources to complete the
development.
Capitalised development costs are recognised as intangible assets and amortised from the point at which
the asset is ready for use on a straight-line basis over its useful life.
(k)
Capitalisation of interest
Interest incurred on external borrowings related to long term projects-in-progress is capitalised until the
assets are ready for their intended use.
(l)
Investments
Investments in subsidiaries and associates held for long term are stated at cost, less allowance for any
diminution in their value. Diminution in the value of an investment is recognised as an expense in the
financial year in which the diminution is identified.
Investments in other non-current investments are shown at cost and an allowance for diminution in value
is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such
investments. Where there has been a decline other than temporary in the value of an investment, such a
decline is recognised as an expense in the financial year.
On disposal of an investment, the difference between net disposal proceeds and the carrying amount is
charged or credited to the income statement, as the case may be.
(m)
Marketable securities and short term investments
Marketable securities and short term investments are stated at the lower of cost and market value on an
aggregate portfolio basis. Cost is derived at on the weighted average basis. Market value is calculated by
reference to the relevant stock exchange quoted selling prices at the close of business at the balance sheet
date. Any write downs to the market value of investments or subsequent write backs to cost are dealt with
through the income statement.
(n)
Impairment of assets
Property, plant and equipment and other non-current assets, including intangible assets, are reviewed
for impairment losses whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of
the asset exceeds its recoverable amount. The recoverable amount is the higher of fair value less cost to
sell. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are
separately identifiable cash flows.
Impairment loss is charged to the income statement unless it reverses a previous revaluation in which case
it is charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in
the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to
revaluation surplus.
(o)
Deferred income
Contributions received from customers to defray the cost of capital projects are credited to the deferred
income account. The amount in this account is released to the income statement on a straight line basis
over 15 years, being the average useful life of such projects.
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Tenaga Nasional Berhad Annual Report 2007