Introductory Document - Colombo Stock Exchange

RAMBODA FALLS (PVT) LIMITEDNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH, 20113.2.1 Property, Plant and Equipment (Cont’d)b. MeasurementGains and losses on disposal of an item of Property, Plant & Equipment are determined by comparingthe proceeds from disposal with the carrying amount of Property, Plant & Equipment and arerecognized net within “Other Income” in Profit & loss. When revalued assets are sold, the amountsincluded in the revaluation surplus reserve are transferred to retained earnings.When parts of an item of property, plant & equipment have different useful lives, they are accounted oras separate items of property, plant & equipment.Expenditure on repairs or maintenance of property, plant and equipment made to restore or maintainfuture economic benefits expected from the assets has been recognized as an expense when incurred.c. Subsequent ExpenditureExpenditure incurred to replace a component of an item of property, plant and equipment that isaccounted for separately, including major inspection and overhaul expenditure, is capitalized. The costof replacing part of an item of Property, Plant & Equipment is recognized in the carrying amount of theitem, if it is probable that the future economic benefits embodied within the part will flow to thecompany and its cost can be measured reliably. The carrying amount of the replaced part isderecognized. The cost of the day-to-day servicing of property, plant and equipment are recognized inprofit or loss as incurred.d. Leased assetsLeases in terms of which the Company assumes substantially all the risks and rewards of ownership areclassified as finance leases. Upon initial recognition the asset under finance leases are measured at anamount equal to the lower of its fair value and the present value of the minimum lease payments at theinception less accumulated depreciation and the resulting lease obligations are included in the creditorsless finance charges. Lease payments consist of capital and interest elements and the interest is chargedto the Income Statement. Assets held under finance leases are amortized over the estimated useful livesunless ownership is not transferred at the end of the lease period. In such cases the assets are amortizedover the shorter of lease terms and their useful lives. Subsequent to initial recognition, the asset isaccounted for in accordance with the accounting policy applicable to that asset.943 Ramboda Falls Limited – Introductory Document