2012 Annual Report - ZTE

ZTE CORPORATIONNotes to Financial Statements (continued)(Prepared in accordance with PRC ASBEs)(All amounts in RMB’000 unless otherwise stated)(English translation for reference only)II.PRINCIPAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)14. Fixed Assets (continued)The Group reviews, at least at each year end, useful lives, estimated residual values and depreciationmethods of fixed assets and makes adjustments if necessary.For details of impairment test methods and impairment provision methods for fixed assets, pleaserefer to Note II.25.15. Construction in progressConstruction-in-progress is measured at the actual construction expenditures, including the necessarycosts incurred for fixed assets before they can be put into use and other related fees.Construction-in-progress is transferred into fixed assets when it is ready for its intended use.For details of impairment test methods and impairment provision methods for construction in progress,please refer to Note II.2516. Borrowing costsBorrowing costs are interest and other costs incurred by the Group in connection with the borrowingsof funds, which include borrowing interest, amortisation of discount or premium on debt, othersupplementary costs and certain foreign exchange differences that occurred from the borrowings inforeign currencies.Borrowing costs directly attributable to the acquisition or construction of assets qualified forcapitalization, i.e., fixed assets, investment properties and inventories that necessarily take a substantialperiod of time to get ready for their intended use or sale, are capitalized as part of the cost of thoseassets. Other borrowing costs are charged to current profit or loss.Capitalization of borrowing costs begins where:(1) Capital expenditure has already happened;(2) Borrowing expenses has already incurred;(3) Purchasing or production activities to get the assets ready for their intended use or sale havealready happened.The capitalization of such borrowing costs ceases when the assets are substantially ready for theirintended use or sale. Borrowing costs incurred afterwards are recognized in profit or loss.178