Financial Statements - Hemas Holdings, Ltd

Hemas Holdings PLC - Annual Report 2007 - 2008Notes to the Financial Statements64d) DerecognitionAn item of Property, Plant and Equipment is derecognisedupon disposal or when no future economic benefits areexpected from its use or disposal. Any gain or loss arising onderecognition of the asset (calculated as the differencebetween the net disposal proceeds and the carrying amountof the asset) is included in the Income Statement in the yearthe asset is derecognised.2.3.9 Capital Work-in-ProgressCapital work-in-progress is stated at cost. These are expensesof a capital nature directly incurred in the construction ofbuildings, major plant and machinery, awaitingcapitalization.Hemas Hospital (Private) Ltd., Hemas Southern Hospitals(Private) Ltd., and Giddawa Hydro Power (Private) Ltd.,commenced projects to develop a chain of hospitals andhydro power plant respectively. The expenses that are ofcapital in nature are accounted as capital work-in-progressuntil the completion of the projects.2.3.10 Leased PropertyLeasehold property comprising of land use rights obtained ona long term basis, is stated at the recorded carrying values asat the effective date of Sri Lanka Accounting Standard 19 -Leases in line with Ruling of the Urgent Issues Task Force ofThe Institute of Chartered Accountants of Sri Lanka. Suchcarrying amounts are amortized over the remaining leaseterm or useful life of the leased property whichever isshorter.2.3.11 Leasesa) Finance LeasesProperty, Plant and Equipment on finance leases, whicheffectively transfer to the Group substantially all of the riskand benefits incidental to ownership of the leased item arecapitalised at the inception of the lease at the fair value ofleased property or, if lower, at the present value of minimumlease payments. Capitalized leased assets are disclosed asFinance Leases under Property, Plant and Equipment anddepreciated over the period the Group is expected to benefitfrom the use of the leased assets.The corresponding principal amount payable to the lessortogether with interest payable over the period of lease isshown as a liability. Lease payments are apportionedbetween the finance charges and reduction of the leaseliability so as to achieve a constant rate of interest on theremaining balance of the liability. The interest payable overthe period is transferred to an interest in suspense account.The interest element of the rental obligations pertaining toeach financial year is charged to Income Statement over theperiod of lease.b) Operating LeasesLeases where the lessor effectively retains substantially allthe risks and benefits of ownership over the leased term, areclassified as operating leases.Lease rentals paid under operating leases are recognised asan expense in the Income Statement on a straight-line basisover the lease term.2.3.12 InvestmentsInitial Recognition:Cost of investment includes purchase cost and acquisitioncharges such as brokerages, fees, duties and bank regulatoryfees. The company distinguishes and presents current andnon current investment in the Balance Sheet.Measurement:a) Current InvestmentsCurrent investments are stated at lower of cost and marketvalue determined on an aggregate portfolio basis.The cost of an investment is the cost of acquisition inclusiveof brokerage fees and stamp duty.Unrealized gains and losses on current investments carried atmarket value i.e. reduction to market value and reversals ofsuch reductions required to reflect current investments atthe lower of cost and market value, are credited or chargedto Income Statement.b) Long Term InvestmentsQuoted and unquoted investments in shares held on a longterm basis are stated at cost.The cost of the investment is the cost of acquisition inclusiveof brokerage fees, stamp duties and bank fees.The carrying amount of long term investments is reduced torecognise a decline other than temporary in the value ofinvestments, determined on an individual investment basis.In the Company's financial statements, investments insubsidiaries were carried at fair value and associates werecarried at cost, net of any provision for other than temporarydiminution in value.c) Investment PropertyInvestment properties are measured initially at cost,including transaction costs. The carrying amount includesthe cost of replacing part of an existing investment propertyat the time that cost is incurred if the recognition criteria aremet; and excludes the costs of day to day servicing of aninvestment property. Subsequent to initial recognition,investment properties are stated at fair value, which reflects