KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
64
NOTES
TO THE FINANCIAL STATEMENTS
3
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(i)
Recognition and measurement (Cont’d)
Purchased software that is integral to the functionality of the related equipment is capitalised as
part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined
by comparing the net proceeds from disposal with the carrying amount of the item, and is
recognised in profit or loss.
(ii) Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised
in the carrying amount of the item if it is probable that the future economic benefits embodied
within the component will flow to the Group and its cost can be measured reliably. The carrying
amount of the replaced component is derecognised. The costs of the day-to-day servicing of
property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components
of individual assets are assessed and if a component has a useful life that is different from the
remainder of that asset, that component is depreciated separately.
Depreciation is recognised as an expense in profit or loss on a straight-line basis over the
estimated useful lives of each component of an item of property, plant and equipment. Leased
assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term.
Depreciation is recognised from the date that the property, plant and equipment are installed
and are ready for use. Property, plant and equipment under construction are not depreciated.
The estimated useful lives for the current and comparative years are as follows:
Freehold building
30 years
Leasehold land and building
remaining lease term of 1 - 22 years
Renovation and improvements
5 years
Machinery and equipment
3 - 20 years
Vessels
5 - 20 years
Motor vehicles
5 years
Furniture, fittings, office equipment and computers 3 - 10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting period,
and adjusted if appropriate.
3.4 Club memberships
Club memberships are stated at cost less allowance for impairment losses.
