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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)
(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
incurred.
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
basis.