annual report - Tenaga Nasional Berhad

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)(m) Marketable securities and short term investmentMarketable securities and short term investment are stated at the lower of cost and market value on an aggregateportfolio basis. Cost is derived at on the weighted average basis. Market value is calculated by reference to therelevant stock exchange quoted selling prices at the close of business at the balance sheet date. Any write downs tothe market value of investments or subsequent write backs to cost are dealt with through the income statement.(n)Impairment of assetsProperty, plant and equipment and other non-current assets, including intangible assets, are reviewed for impairmentlosses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverableamount. The recoverable amount is the higher of fair value less cost to sell and its value-in-use. For the purposes ofassessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows.Impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is chargedto the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statementunless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.(o)(p)(q)Deferred incomeContributions received from customers to defray the cost of capital projects are credited to the deferred incomeaccount. The amount in this account is released to the income statement on a straight line basis over 15 years,being the average useful life of such projects.Operating leasesAssets leased out as operating leases are included within property, plant and equipment in the balance sheet andthey are depreciated over their expected useful lives on a basis consistent with similar assets.InventoriesInventories are stated at the lower of cost and net realisable value.Cost of work-in-progress and finished goods comprise raw materials, direct labour and a proportion of the productionoverheads. Cost is determined on the weighted average and first-in-first-out basis.(r)(s)(t)Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completionand selling expenses.Trade receivablesTrade receivables are carried at anticipated realisable value. Bad debts are written off in the period in which theyare identified. An allowance is made for doubtful receivables based on review of all outstanding amounts at thefinancial year end.Trade payablesTrade payables are stated at cost, which is the fair value of the consideration to be paid in the future for the goodand services received.Cash and cash equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits held at callwith banks, bank overdrafts and short term, highly liquid investments that are readily convertible to known amountsof cash and which are subject to an insignificant risk of changes in value.[ Tenaga Nasional Berhad ] [ Annual Report 2008 ]193