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CSIR ANNUAL REPORT 2010/11
Notes to the Annual Financial Statements
for the year ended 31 March 2011
1PRINCIPAL ACCOUNTING POLICIES (continued)
Foreign operations (continued)
Foreign exchange gains and
losses arising from a monetary item
receivable from or payable to a
foreign operation, the settlement of
which is neither planned nor likely in
the foreseeable future, are considered
to form part of a net investment in a
foreign operation and are recognised
directly in other comprehensive income
in the FCTR.
Foreign currency transactions and
balances
Transactions in foreign currencies are
converted to South African rand at the
rate of exchange ruling at the date
of the transactions. Monetary assets
and liabilities denominated in foreign
currencies are stated in South African
rand using the rates of exchange ruling
at the reporting date. The resulting
exchange differences are recognised
in the statement of comprehensive
income. Non-monetary assets and
liabilities stated at fair value are
translated at foreign exchange rates
ruling at the date the fair value was
determined.
Property, plant and
equipment
Owned assets
Land is stated at cost less accumulated
impairment losses. Buildings, plant,
equipment and vehicles are stated at
cost less accumulated depreciation
and accumulated impairment losses.
Cost includes expenditure directly
attributable to acquisition.
The cost of self-constructed assets
includes the cost of materials, direct
labour, the initial estimate, where
relevant, of the costs of dismantling and
removing the items and restoring the
site on which these are located and an
appropriate proportion of production
overheads.
Where parts of an item of property,
plant and equipment have different
useful lives, these are accounted for as
separate items (major components) of
property, plant and equipment.
Gains and losses on disposal of an
item of property, plant and equipment
are determined by comparing
proceeds from disposal with the
carrying amount of property, plant and
equipment and are recognised in profi t
or loss.
Subsequent costs
The Group recognises in the carrying
amount of an item of property, plant
and equipment, the cost of replacing a
part of such an item when that cost is
incurred, if it is probable that the future
economic benefi ts embodied in the
item will fl ow to the Group and the cost
of the item can be measured reliably.
The carrying amount of the replaced
part is derecognised. The costs of the
day-to-day servicing of property, plant
and equipment are recognised in profi t
or loss as incurred.
Depreciation
Depreciation is based on cost less
residual value and is calculated on
the straight-line method from the day
the assets are available for use, at
rates considered appropriate to write
off carrying values over the estimated
useful lives of the assets, except for
assets specifi cally acquired for a
contract, which are depreciated over
the life of the contract.
The estimated lives of the main
categories of property, plant and
equipment are as follows:
• Buildings: 40 years
• Equipment: 3 to 10 years
• Vehicles: 10 years
Depreciation methods, useful lives
and current residual values, if not
insignifi cant, are reassessed annually.
Intangible assets
Research and development
Expenditure on research activities,
undertaken with the prospect of
gaining new scientifi c or technical
knowledge and understanding, is
recognised in profi t or loss when
incurred.
Development activities involve a plan
or design for the production of new or
substantially-improved products and
processes. Development expenditure
is capitalised only if development
costs can be measured reliably, the
product or process is technically
and commercially feasible, future
economic benefi ts are probable, and
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