Wah Seong Corporation Berhad Annual Report 2021 114 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 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 RM18,794,000 (2020: RM21,896,000) and RM1,331,000 (2020: RM1,474,000) respectively. Minimum lease receivables on investment properties and equipment are as follows: Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000 Not later than 1 year 3,548 13,165 1,582 1,476 Later than 1 year and not later than 2 years 909 1,765 909 213 Later than 2 years and not later than 5 years 714 - 714 - 5,171 14,930 3,205 1,689 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. Investment properties are derecognised upon disposal or when they are permanently withdrawn from use and no future economic benefits are expected from their disposal. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.
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