Annual Report 2011 - QuamIR

Notes to the Consolidated Financial StatementsFor the year ended 31 March 20113. Significant Accounting Policies (continued)Property, plant and equipmentProperty, plant and equipment including buildings and leasehold land (classified as finance leases)held for use in the production or supply of goods or services, or for administrative purposes (otherthan construction in progress as described below), are stated in the consolidated statement of financialposition at cost, less subsequent accumulated depreciation and subsequent accumulated impairmentlosses, if any.Depreciation is recognized so as to write off the cost of assets (other than construction in progressand mining structures) less their residual values over their useful lives, using the straight-line method,as follows:Leasehold land : Over the term of the leaseBuildings : Over the shorter of the term of lease or 50 yearsBuildings at the mining site : 5 to 7 yearsLeasehold improvements : 5 yearsPlant and machinery : 2 – 7 yearsMotor vehicles : 3 – 8 yearsFurniture, fixtures and equipment : 3 – 5 yearsMining structures are included in property, plant and equipment and are depreciated on the unit ofproduction method utilizing only recoverable reserves as the depletion base and a proportion of resourcesavailable to be mined by the production equipment to the extent that such resources are consideredto be economically recoverable.Construction in progress represents buildings, mining structures, and plant and equipment in the courseof construction for its own use purposes. Construction in progress is stated at cost less any identifiedimpairment loss. Cost comprises construction expenditure and other direct costs attributable to suchprojects. Construction in progress is classified to the appropriate category of property, plant andequipment when completed and ready for intended use. Depreciation of these assets, on the same basisas other property assets, commences when the assets are ready for their intended use.The estimated useful lives, residual values and depreciation method are reviewed at the end of eachreporting period, with the effect of any changes in estimate accounted for on a prospective basis.Assets held under finance leases are depreciated over their expected useful lives on the same basis asowned assets or, where shorter, the term of the relevant lease.An item of property, plant and equipment is derecognized upon disposal or when no future economicbenefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposalor retirement of an item of property, plant and equipment is determined as the difference between thesales proceeds and the carrying amount of the asset and is recognized in profit or loss.Annual Report 201159