annual report - Tenaga Nasional Berhad

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)(f)Property, plant and equipment and depreciation (Cont’d.)Surpluses arising on revaluation are credited to the revaluation reserve account. Any deficit arising from revaluationis charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for thesame asset. In all other cases, a decrease in the carrying amount is charged to the income statement.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, onlywhen it is probable that future economic benefits associated with the item will flow to the Group and the cost ofthe item can be measured reliably. The carrying amount of the replaced part is derecognised.The cost of major overhaul/inspection is recognised in the asset’s carrying amount as a replacement and theremaining carrying amount of the previous major overhaul/inspection is derecognised.Major spare parts and standby equipment are recognised as assets when the Group expects to use them duringmore than one period. Similarly, if the spare parts and servicing equipment can be used only in connection with anitem of property, plant and equipment, they are accounted for as property, plant and equipment.Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amountand are taken into account in determining profit/(loss) before taxation. On disposal of revalued assets, the amountin revaluation reserve relating to those property, plant and equipment are transferred to retained profits.Freehold land and capital project-in-progress are not depreciated.Depreciation is provided on all other categories of property, plant and equipment on a straight line basis whichreflects the estimated useful lives of the assets.The estimated useful lives of property, plant and equipment are as follows:(g)Buildings and civil worksPlant and machineryLines and distribution mainsDistribution servicesMetersPublic lightingFurniture, fittings and office equipmentMotor vehicles10 to 60 years10 to 40 years25 to 35 years20 years15 years15 to 25 years3 to 10 years5 to 10 yearsWhere an indication of impairment exists, the carrying amount of the asset is assessed and written down immediatelyto its recoverable amount (see Note 2(n)).Prepaid operating leasesThe Directors have applied the transitional provisions of FRS No. 117 “Leases”, treating the leasehold land asprepaid operating leases which was previously classified within property, plant and equipment and allow the Groupto retain the unamortised revalued amount of the previously revalued leasehold land as the surrogate carryingamount of prepaid operating leases and such prepaid operating leases shall be amortised on a straight line basisover the lease term.Leasehold land is amortised over the remaining period of the respective leases ranging from 5 to 99 years on astraight line basis.[ Tenaga Nasional Berhad ] [ Annual Report 2008 ]191