SCC Holdings Berhad Annual Report 2019

notes to the financial statement 31 december 2019 (cont’d) 54 SCC Holdings Berhad | Annual Report 2019 3. Significant Accounting Policies (cont’d) (c) Property, plant and equipment (cont’d) (iii) Depreciation (cont’d) Property, plant and equipment are depreciated based on the principal annual rates as follows: Buildings 3.33% Office equipment, furniture and fittings 5% - 10% Machinery 10% Motor vehicles 20% Renovation 10% The residual values, useful lives and depreciation method are reviewed at each reporting period end 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 property, plant and equipment. (d) Leases Policy applicable from 1 January 2019 (i) As lessee The Group and the Company recognises a ROU asset and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is located, less any lease incentives received. The ROU asset is subsequently measured at cost less any accumulated depreciation, accumulated impairment loss and, if applicable, adjusted for any remeasurement of lease liabilities. The policy of recognition and measurement of impairment losses is in accordance with Note 3(k)(i) to the financial statements. TheROUasset under costmodel is depreciatedusing the straight-linemethod fromthe commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. The estimated useful lives of the ROU assets are determined on the same basis as those of property, plant and equipment as follows: Buildings Over the lease term Shoplots Over the lease term The ROU assets are subject to impairment. The lease liability is initially measured at the present value of future lease payments at the commencement date, discounted using the respective Group entities’ incremental borrowing rates. Lease payments included in the measurement of the lease liability include fixed payments, any variable lease payments, amount expected to be payable under a residual value guarantee, and exercise price under an extension option that the Group and the Company is reasonably certain to exercise.