234 WASCO BERHAD SECTION 6 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 3 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Recognition and measurement Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated as it has an indefinite life. Capital work-in-progress and assets under construction included in plant and equipment are not depreciated until these assets are ready for their intended use. Depreciation is calculated to write off the depreciable amount on a straight line basis over their estimated useful lives. The depreciable amount is determined after deducting residual value from cost. The estimated useful lives of the property, plant and equipment are as follows: Buildings 10 - 50 years Plant, machinery, tools and equipment 2 - 25 years Electrical installations, computer and office equipment, furniture and fittings 3 - 10 years Motor vehicles 3 - 5 years Renovation, yard development and store extension 2 - 50 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each financial year. Key estimates The determination of useful lives, residual values and depreciation methods involves estimates and assumptions and is reviewed annually. Any changes to useful lives or any other estimates or assumptions, including the expected impact of climate change and the transition to a lower carbon economy, may affect prospective depreciation rates and asset carrying values. Impairment assessment The Group assesses whether there is any indication of impairment at the end of each reporting period. Impairment is measured by comparing the carrying amount of an asset with its recoverable amount. Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). For certain plant and equipment, fair value less cost to sell is determined based on estimates prepared by an independent expert. The fair value is estimated based on comparison of market transacted price for similar plant and equipment, and where necessary, adjusted for age, usage and conditions of the plant and equipment and expectation of future market outlook of the industry due to the uncertainty of the future economic condition. In the prior financial year ended 31 December 2024, the Group fully impaired an idle plant and machinery located in Europe amounting to RM25,215,000 following the demobilisation of the assets. Derecognition Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from their use. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the profit or loss in the financial year the asset is derecognised.
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