KUB Malaysia Berhad Annual Report 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.11 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Freehold land has an unlimited useful life and therefore is not depreciated. Long-term leasehold land is initially measured at cost and depreciated over their lease terms except for a leasehold land with a remaining lease period of 30 years to 76 years which is not depreciated as the lease period is more than the expected useful life of the Group. Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and any accumulated impairment losses. Bearer plants are living plants that are used in the production or supply of agriculture produce for more than one period and have remote likelihood of being sold as agriculture produce. The bearer plants that are available for use are measured at cost less accumulated depreciation and accumulated impairment losses. All costs directly related to bearer plants are capitalised until such time as the bearer plants reach maturity, at which point all further costs and interests are expensed and depreciation commences. Upon maturity, these expenditures are depreciated based on estimated annual yield over 25 years. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates: Factory and buildings - Factory and buildings 2% - 7% - Storage tanks 7.5% - 10% Plant, renovation, cylinders and equipment - Renovations 10% - 20% - Plant, machinery and tools 5% - 33% - Cylinders 7.5% - 20% - Furniture and fittings 10% - 33% - Office equipment and computers 10% - 33% - Tower infrastructure 10% Motor vehicles 20% Assets under construction are not depreciated as these assets are not yet available for use. The residual value, useful life and depreciation method are reviewed at the end of the reporting period, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the year the asset is derecognised. 3.12 Investment properties Investment properties are investments in land and buildings which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses, consistent with the accounting policy for property, plant and equipment as stated in Note 3.11. The freehold land element of an investment property is not depreciated due to the unlimited useful life. Buildings which are situated on leasehold land are also depreciated at annual rate of depreciation of 2%. 71 ANNUAL REPORT 2021 FINANCIAL STATEMENTS