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

d) Leasehold Property
Notes to the Financial Statements
Year Ended 31 st March 2011
Leasehold property comprising of land use rights obtained on a long term basis, is stated at the recorded carrying
values as at the effective date of Sri Lanka Accounting Standard 19 – Leases in line with Ruling of the Urgent Issues
Task Force of The Institute of Chartered Accountants of Sri Lanka. Such carrying amounts are amortised over the
remaining lease term or useful life of the leased property whichever is shorter.
2.3.13 Investment in Joint Venture
The company have interest in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangement
whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a
joint venture that involves the establishment of a separate entity in which each venturer has an interest. The company
recognises its interest in the joint venture using the equity method.
Under the equity method, the investment in the joint venture is carried in the balance sheet at cost plus post acquisition
changes in the company’s share of net assets of the associate. Goodwill relating to a joint venture is included in the carrying
amount of the investment and is not amortised. The income statement reflects the share of the results of operations of the joint
venture. Where there has been a change recognised directly in the equity of the joint venture, the company recognises its
share of any changes and discloses this, when applicable, in the statement of changes in equity. Profits and losses resulting
from transactions between the company and the joint venture are eliminated to the extent of the interest in the joint venture.
The reporting dates of the joint venture and the company are identical and the joint venture’s accounting policies conform to
those used by the company for like transactions and events in similar circumstances
2.3.14 Provisions
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, where
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of time is recognized as an interest expense.
2.3.15 Retirement Benefit Obligation
a) Defined Benefit Plans –Gratuity
The Company measures the present value of the promised retirement benefits of gratuity which is a defined benefit plan
with the advice of an actuary every two years using projected benefits valuation method. Actuarial gains and losses are
recognised as income or expenses over the expected average remaining working lives of the participants of the plan.
The key assumptions used by the actuary include the following:
i) Rate of Discount 11.5% (per annum)
ii) Rate of Salary Increase - Workers 9% (per annum)
- Staff 10% (per annum)
iii) Retirement Age - Workers 55 years
- Staff 55 years
iv)
The company will continue as a going concern.
The actuarial present value of the accrued benefits as at 31st March 2011 is Rs. 464,154,667/- This item is grouped
under retirement benefit obligations in the balance sheet. The liability is not externally funded.
Elpitiya Plantations Plc Annual Report 2010/11
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