73 / 178
71
GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.4 Property, plant and equipment and depreciation (continued)
After initial recognition, property, plant andequipment are statedat cost less accumulateddepreciation
and any accumulated impairment losses.
Depreciation is calculated to write off the cost of the assets to their residual values on a straight line
basis over their estimated useful lives. The principal depreciation periods are as follows:
Long term leasehold land
99 years
Buildings
50 years
Computer equipment
3 years
EDC equipment
5 years
Computer software
3 to 10 years
Motor vehicles
5 years
Furniture, fittings and office equipment
5 to 10 years
Renovation
2 to 5 years
At the end of each reporting period, the carrying amount of an item of property, plant and equipment
is assessed for impairment when events or changes in circumstances indicate that its carrying amount
may not be recoverable. A write down is made if the carrying amount exceeds the recoverable
amount (see Note 4.8 to the financial statements on impairment of non-financial assets).
The residual values, useful lives and depreciation method are reviewed at the end of each reporting
period to ensure that the amount, method and period of depreciation are consistent with previous
estimates and the expected pattern of consumption of the future economic benefits embodied in the
items of property, plant and equipment. If expectations differ from previous estimates, the changes are
accounted for as a change in an accounting estimate.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when
no future economic benefits are expected from its use or disposal. The difference between the net
disposal proceeds, if any, and the carrying amount is included in profit or loss.
4.5 Leases and hire purchase
(a) Finance leases and hire purchase
Assets acquired under finance leases and hire purchase which transfer substantially all the risks and
rewards of ownership to the Group are recognised initially at amounts equal to the fair value of
the leased assets or, if lower, the present value of minimum lease payments, each determined at
the inception of the lease. The discount rate used in calculating the present value of the minimum
lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the
incremental borrowing rate of the Group is used. Any initial direct costs incurred by the Group are
added to the amount recognised as an asset. The assets are capitalised as property, plant and
equipment and the corresponding obligations are treated as liabilities. The property, plant and
equipment capitalised are depreciated on the same basis as owned assets.
The minimum lease payments are apportioned between the finance charges and the reduction
of the outstanding liability. The finance charges are recognised in profit or loss over the period of
the lease term so as to produce a constant periodic rate of interest on the remaining lease and
hire purchase liabilities.