2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Property, plant and equipment (continued) (i) Recognition and measurement (continued) When significant 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 proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other operating income” or “other operating expenses” respectively 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 or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. 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, then that component is depreciated separately. Freehold land is not depreciated. Expenses incurred for the construction of tangible assets attributable to ongoing projects incurred are capitalised as ‘capital work-in-progress’. Capitalisation is made within tangible assets according to the nature of the expenditure. No depreciation is charged during this phase until the asset is ready for use. The depreciation rate would be calculated based on the useful life of the asset to be assessed once it is ready for use. Depreciation is calculated on a straight–line basis to allocate their depreciate amounts over their estimated useful lives as follows: • Buildings and facility system 15 – 50 years • Office renovations 5 – 10 years • Plant and machinery 3 – 8 years • Equipment and motor vehicles 3 – 15 years • Office equipment, furniture and fittings 5 – 10 years • Computer equipment 3 – 10 years • Floating production, storage and offloading (FPSO) and vessel 10 – 20 years • Technology assets 4 years Depreciation of oil and gas assets comprising subsea facilities and equipment is computed based on the unit– of–production method using proven and probable developed reserves. Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate. Integrated Report 2023 211
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