Background Image
Previous Page  122 / 204 Next Page
Show Menu
Previous Page 122 / 204 Next Page
Page Background




(11817-V) |

Annual Report



2.3 Summary of Significant Accounting Policies (Cont’d)

(n) Leases

(i) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental

to ownership of the leased item, are capitalised at the inception of the lease at the fair value

of the leased asset or, if lower, at present value of the minimum lease payments. Any initial

direct costs are also added to the amount capitalised. Lease payments are apportioned

between the finance charges and reduction of the lease liability so as to achieve a constant

rate of interest on the remaining balance of the liability. Finance charges are charged to profit

or loss. Contingent rents, if any, are charged as expenses in the periods in which they are


Leased assets are depreciated over the estimated useful life of the asset. However, if there

is no reasonable certainty that the Group will obtain ownership by the end of the lease term,

the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense on a straight-line basis over

the term of the lease term. The aggregate benefit of incentives provided by the lessor is

recognised as a reduction of rental expense over the lease term on a straight-line basis.

(ii) As lessor

Leases where the Group and the Company retain substantially all the risks and rewards

of ownership of the asset are classified as operating leases. Initial direct costs incurred in

negotiating an operating lease are added to the carrying amount of the leased asset and

recognised over the lease term on the same basis as rental income. The accounting policy

for rental income is set-out in Note 2.3(d)(ii).

(o) Impairment of Non-financial Assets

The Group assesses at each reporting date whether there is an indication that an asset may be

impaired. If any such indication exists, or when an annual impairment assessment for an asset is

required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value

in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which

there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset

are discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. Where the carrying

amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable

amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated

first to reduce the carrying amount of any goodwill allocated to those units or groups of units and

then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata