One - Lippo Malls Indonesia Retail Trust - Investor Relations

64Lippo-Mapletree Indonesia Retail Trust Annual Report 2009Notes to the Financial Statements (Cont’d)31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)Translation of Financial Statements of Other EntitiesEach entity in the Group determines the appropriate functional currency as it refl ects the primary economic environment in whichthe entity operates. In translating the fi nancial statements of an investee for incorporation in the combined fi nancial statements theassets and liabilities denominated in currencies other than the functional currency of the Group are translated at end of the reportingyear rates of exchange and the income and expense items are translated at average rates of exchange for the year. The resultingtranslation adjustments (if any) are recognised in other comprehensive return and accumulated in a separate component of equityuntil the disposal of that investee.Segment ReportingAn operating segment is a component of an entity that engages in business activities from which it may earn revenues and incurexpenses (including revenues and expenses relating to transactions with other components) whose operating results are regularlyreviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment andassess its performance and for which discrete fi nancial information is available. Segment information has not been presented as allof the Group’s investment properties are used primarily for retail purposes and are all located in Indonesia. They are regarded as onecomponent by the chief operating decision maker.Borrowing CostsAll borrowing costs that are interest and other costs incurred in connection with the borrowing of funds that are directly attributableto the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready fortheir intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to preparethe qualifying asset for its intended use or sale are complete. Other borrowing costs are recognised as an expense in the period inwhich they are incurred. The interest expense is calculated using the effective interest rate method.Unit Based PaymentsThe cost is recognised as an expense when the units are issued for services. The issued capital is increased by the fair value ofthe transaction.Plant and EquipmentDepreciation is provided on a straight-line basis to allocate the gross carrying amounts less their residual values over their estimateduseful lives of each part of an item of these assets. The annual rates of depreciation are as follows:Plant and equipment – 10%An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciatedassets still in use are retained in the fi nancial statements.Plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciationand any accumulated impairment losses. The gain or loss arising from the derecognition of an item of plant and equipment isdetermined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised inthe statements of total return. The residual value and the useful life of an asset is reviewed at least at each end of the reporting year,if expectations differ signifi cantly from previous estimates, the changes are accounted for as a change in an accounting estimate,and the depreciation charge for the current and future periods are adjusted.Cost also includes acquisition cost, any cost directly attributable to bringing the asset to the location and condition necessary forit to be capable of operating in the manner intended by management. Subsequent cost is recognised as an asset only when it isprobable that future economic benefi ts associated with the item will fl ow to the entity and the cost of the item can be measuredreliably. All other repairs and maintenance are charged to the statements of total return when they are incurred.