Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.10 Fixed assetsFixed assets are initially recorded at cost. Subsequent to recognition, fi xed assets are stated at cost less accumulateddepreciation and any accumulated impairment losses.When an asset is revalued, any increase in the carrying amount is credited directly to the asset revaluation reserve. However,the increase is recognised in the profi t and loss account to the extent that it reverses a revaluation decrease of the sameasset previously recognised in the profi t and loss account. When an asset’s carrying amount is decreased as a result of arevaluation, the decrease is recognised in the profi t and loss account. However, the decrease is debited directly to the assetrevaluation reserve to the extent of any credit balance existing in the reserve in respect of that asset.Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and thenet amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reservein respect of an asset is transferred directly to accumulated profi ts on retirement or disposal of the asset.Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of an asset begins when it isavailable for use and is computed on a straight-line basis over the estimated useful life of the asset as follows:Freehold buildings 2% - 3%Leasehold buildings 1.42% - 3%Plant and machinery 10%Computers 18% - 100%Motor vehicles 18% - 40%Shop renovations 33 1 / 3%Furniture and fi ttings 10% - 33 1 / 3%Offi ce equipment 10% - 20%Capital work-in-progress is not depreciated as these assets are not available for use.The carrying values of fi xed assets are reviewed for impairment when events or changes in circumstances indicate that thecarrying value may not be recoverable.The residual values, useful life and depreciation method are reviewed at each fi nancial year-end to ensure that the amount,method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of thefuture economic benefi ts embodied in the fi xed assets.Fixed asset is derecognised upon disposal or when no future economic benefi ts are expected from its use or disposal.Any gain or loss arising on derecognition of the asset is included in the profi t and loss account in the year the asset isderecognised.Notes to the Financial Statements 91Annual Report 2006