Eng - IOI Group

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Notes To The Financial Statements cont’d5. SIGNIFICANT ACCOUNTING POLICIES cont’d5.3 Property, Plant and Equipment and DepreciationAll items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributableto the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any othercosts directly attributable to bringing the assets to working condition for its intended use, and the costs of dismantling andremoving the items and restoring the site on which they are located.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only whenthe cost is incurred and it is probable that future economic benefits associated with the item will flow to the Group and thecost of the item can be measured reliably. The cost of the day-to-day servicing of property, plant and equipment are chargedto the income statement during the financial period in which they are incurred.Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item andwhich have different useful lives, are depreciated separately.After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulatedimpairment losses.Freehold land and construction in progress are not depreciated.Other property, plant and equipment are depreciated on the straight-line method so as to write off the cost of the assets overtheir estimated useful lives. The principal annual depreciation rates are as follows:Buildings and improvements 2% - 10%Plant and machinery 4% - 20%Motor vehicles 10% - 20%Furniture, fittings and equipment 5% - 33%Golf Course 2%Depreciation on assets under construction commences when the assets are ready for their intended use.At each balance sheet date, the carrying amount of an item of property, plant and equipment is assessed for impairmentwhen events or changes in circumstances indicate that its carrying amount may not be recoverable.The residual values, useful lives and depreciation method are reviewed at each financial year end to ensure that the amount,method and period of depreciation are consistent with previous estimates and expected pattern of consumption of the futureeconomic benefits embodied in the items of property, plant and equipment.The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economicbenefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carryingamount is recognised in the income statement.151ANNUAL REPORT 2007IOI Corporation Berhad
Notes To The Financial Statements cont’d5. SIGNIFICANT ACCOUNTING POLICIES cont’d5.3 Property, Plant and Equipment and Depreciation cont’dProperty that is being constructed for future use as investment property is accounted for as property, plant and equipmentuntil construction or development is complete, at which time it is remeasured to fair value and reclassified as investmentproperty. Any gain or loss arising on remeasurement is recognised in the income statement.When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair valueand reclassified as investment property. Any gain arising on remeasurement is recognised directly in equity. Any loss isrecognised immediately in the income statement.The fair value of property, plant and equipment recognised as a result of a business combination is based on market values.The market value of property is the estimated amount for which a property could be exchanged on the date of valuationbetween a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties hadeach acted knowledgeably, prudently and without compulsion. The market value of items of plant, equipment, fixtures andfittings is based on the quoted market prices for similar items.5.4 New Planting and Replanting ExpenditureNew planting expenditure, which represents total cost incurred from land clearing to the point of harvesting, is capitalisedunder plantation development expenditure and is not amortised. Replanting expenditure, which represents cost incurred inreplanting old planted areas, is charged to the income statement in the financial year it is incurred.5.5 Borrowing CostsCosts incurred on external borrowings to finance qualifying assets are capitalised until the assets are ready for their intendeduse after which such expenses are charged to the income statement.5.6 LeasesA lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental toownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets.Subsequently, the land and buildings elements of a lease are considered separately for the purposes of lease classification.All leases that do not transfer substantially all the risks and the rewards are classified as operating leases other than thefollowing:• property held under operating leases that would otherwise meet the definition of an investment property is classified asan investment property on a property-by-property basis and, if classified as investment property, is accounted for as ifheld under a finance lease; and• land held for own use under an operating lease, the fair value of which cannot be measured separately from the fairvalue of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease,unless the building is also clearly held under an operating lease.IOI Corporation BerhadANNUAL REPORT 2007 152
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Our Vision... is to be a leading co
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Chairman’s StatementDear Valued S
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Responsibility“ Today, more than
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Group Performance Highlights2007 20
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Efficiency“The future belongs to
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Management’s Discussion and Analy
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PALM OIL BUSINESS STREAMManagement
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KepongKLCCKL SentralPetaling JayaKu
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Corporate InformationBOARD OF DIREC
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Profile of Directors cont’dDATO
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Profile of Directors cont’dDATUK
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Excellence in ExecutionOur commitme
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Audit Committee Report cont’dTERM
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Audit Committee Report cont’dTERM
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Corporate GovernanceINTRODUCTIONThe
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Corporate Governance cont’dTHE BO
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Corporate Governance cont’dTHE BO
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Corporate Governance cont’dSHAREH
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Statement on Internal ControlINTROD
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Statement on Internal Control cont
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Other InformationCOMPOSITION OF SHA
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RECURRENT RELATED PARTY TRANSACTION
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Other Information cont’dPENALTIES
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Senior Management TeamGroup Chief E
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Global PresenceNORTH AMERICA• USA
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Location of Operations in MalaysiaP
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Corporate CalendarNov 2006• IOI P
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Corporate Calendar cont’dMarch200
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Statement By DirectorsIn the opinio
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Group PropertiesA. PLANTATION ESTAT
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Group Properties cont’dA. PLANTAT
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Group Properties cont’dB. DEVELOP
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Group Properties cont’dC. INVESTM
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Group Properties cont’dD. INDUSTR
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Group Properties cont’dE. OTHER P
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Notice of Annual General MeetingNOT
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Notice of Annual General Meeting co
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Statement Accompanying Noticeof Ann
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Shareholders Information cont’das
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fold herestampThe Company Secretary
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Eng - IOI Group

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