Wah Seong Corporation Berhad Annual Report 2020

104 WAH SEONG CORPORATION BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.8 Leases (continued) Accounting as lessor (continued) (b) Operating leases The Group and the Company lease its investment properties under operating leases to non-related parties. The Group also leases its plant and equipment under operating leases to an associate. Leases of investment properties and equipment, where the Group and the Company retain substantially all risks and rewards incidental to ownership, are classified as operating leases. Rental income from operating leases is recognised in profit or loss on a straight line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are earned. During the financial year, operating lease income from lease contracts in which the Group and the Company act as a lessor is RM21,896,000 (2019: RM19,842,000) and RM1,474,000 (2019: RM1,629,000) respectively. Minimum lease receivables on investment properties and equipment are as follows: Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 Not later than 1 year 13,165 19,220 1,476 1,529 Later than 1 year and not later than 2 years 1,765 13,018 213 602 Later than 2 years and not later than 3 years - 1,586 - 12 14,930 33,824 1,689 2,143 2.9 Investment properties Investment properties are properties held to earn rental income or for capital appreciation or both rather than for use in the production or supply of goods and services or for administrative purposes, or sale in the ordinary course of business. (a) Measurement basis Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses, if any. The cost of investment properties includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with the asset will flow to the Group and the Company and the cost of the asset can be measured reliably. All other repair and maintenance costs are charged to the profit or loss during the financial year in which they are incurred. At each reporting date, the Group and the Company assess whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the investment property is assessed and written down immediately to its recoverable amount. See accounting policy 2.13 on impairment of non-financial assets.