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2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)(f)Leased assetsA distinction is made between ®nance leases which effectively transfer from the lessor tothe lessee substantially all the risks and bene®ts incidental to the ownership of the leasedassets, and operating leases under which the lessor effectively retains substantially all suchrisks and bene®ts.Assets purchased under ®nance leases are capitalised and depreciated over the useful livesof the assets. Leased assets and liabilities are established at the present value of theminimum lease payments. The excess of lease payments over the recorded leaseobligations is treated as ®nance charges, which are amortised over each lease term togive a constant rate of charge on the remaining balance of the obligation.Operating lease payments are charged to the income statement in the period in which theyare incurred.(g)Revenue recognitionRevenue from the sale of goods is recognised upon delivery to customers.Rental income is recognised on an accrual basis.Interest income is accrued on a day to day basis.(h)TaxationTax expense is determined on the basis of tax effect accounting using the liability method.Deferred taxation is provided on signi®cant timing differences arising from the differenttreatments in accounting and taxation of relevant items.In accounting for timing differences, deferred tax assets are not recognised unless there isreasonable expectation of their realisation.3. SALESSales represent the invoiced value of goods sold, net of goods and services tax.4. OPERATING PROFITFor the period fromFor the year ended 1 January 1999 to31 March 200131 March 2000$ $Operating pro®t is arrived at:After charging:Auditors' remunerationÐ Current year 17,000 14,522Ð Underprovision in prior year 4,000 ÐDepreciation of:Ð Building improvements 26,107 32,633Ð Computer systems 95,816 70,388Ð Motor vehicles 43,391 26,389Ð Of®ce equipment, furniture and ®ttings 7,607 3,918Ð Warehouse equipment 5,459 6,824Directors' remuneration 439,360 403,900Bad debts written off Ð 470Provision for doubtful trade debts 1,415 ÐE-8