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KUMPULAN FIMA BERHAD

(11817-V) |

Annual Report

2016

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.3 Summary of Significant Accounting Policies (Cont’d)

(h) Property, Plant and Equipment and Depreciation (Cont’d)

Assets under construction or capital work-in-progress included in property, plant and equipment

are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or

changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end,

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 the profit or loss in the year the asset is derecognised.

(i) Investment Properties

Investment properties are properties 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. Freehold land has an unlimited useful life

and therefore is not depreciated.

Depreciation of investment properties is provided for on a straight-line basis to write-off the cost of

the property to its residual value over its estimated useful life, at the following annual rates:

Freehold building

2%

Leasehold building

2% to 3%

Leasehold land

Over lease period

The residual values, useful life and depreciation method are reviewed at each financial year-

end to ensure that the amount, method and period of depreciation are consistent with previous

estimates and the expected pattern of consumption of the future economic benefits embodied in

the investment property.

Investment properties are derecognised when either they have been disposed of or when the

investment property is permanently withdrawn from use and no future economic benefit is expected

from its disposal. Any gains or losses on the retirement or disposal of an investment property are

recognised in the profit or loss in the year in which they arise.

(j) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined on the First-In, First-Out (“FIFO”) basis. Cost of finished goods and work-in-

progress includes direct materials, direct labour, other direct costs and appropriate production

overheads.