Elpitiya Plantations Plc Annual Report 2010/11 - Colombo Stock ...

e) Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the
year the asset is derecognised.
2.3.10 Immature and Mature Plantations
The cost of Replanting and New Planting are classified as immature plantations up-to the time of harvesting the crop.
Further, the general charges incurred on the plantation are apportioned based on the labour days spent on respective
Replanting and New Planting, and capitalised on the immature areas. The remaining portion of the general charges is expensed
in the accounting period in which it is incurred.
The cost of areas coming into bearing are transferred to mature plantations and depreciated over their useful life period.
2.3.11 Infilling Cost
Where infilling results in an increase in the economic life of the relevant field beyond its previously assessed standard of
performance, the costs are capitalised in accordance with Sri Lanka Accounting Standard No. 32 and depreciated over the
useful life at rates applicable to mature plantation.
2.3.12 Leases
Notes to the Financial Statements
Year Ended 31 st March 2011
Infilling costs that are not capitalised have been charged to the Income Statement in the year in which they are incurred.
a) Finance leases - where the company is the lessee
Property, plant and equipment on finance leases, (which effectively transfer to the company substantially all of the risks
and benefits incidental to ownership of the leased item) are capitalised at their cash price, and depreciated/amortised
over the period the company is expected to benefit from the use of the leased assets.
The corresponding principal amount payable to the lessor is shown as a liability.
The finance charges allocated to future periods are separately disclosed under Notes 12.5 & 15.
The interest element of the rental obligation applicable to each financial year is charged to the Income Statement over
the period of the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.
The cost of improvements to or on leased property is capitalised, and depreciated over the unexpired period of the lease
or the estimated useful lives of the improvements, whichever is shorter.
b) Assets leased to third parties under agreements that transfer substantially all the risks and rewards associated with
ownership other than legal title, are classified as finance leases. Lease rentals receivable from the lessee shown in the
balance sheet.
c) Operating Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are
classified as operating leases.
Lease payments (excluding costs for services such as insurance and maintenance) paid under operating leases are
recognised as an expense in the income statement on a straight-line basis over the lease term
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Elpitiya Plantations Plc Annual Report 2010/11