3.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
3.1
Basis of Consolidation (cont’d)
(vi)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with associate are eliminated against the investment
to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same
way as unrealised gains, but only to the extent that there is no evidence of impairment.
3.2
Property, Plant and Equipment
Property, plant and equipment are initially stated at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying
amount of the item or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and
maintenance are charged to the profit or loss during the financial period in which they are incurred.
Leasehold land and buildings erected on leasehold land are depreciated on a straight line basis
over the lease period of the land of 60 years. Depreciation on other property, plant and equipment
is calculated on the straight line method to write off the cost of each asset to its residual value over its
estimated useful life at the following annual rates:
Machineries and equipment
10% - 33.33%
Furniture, fittings and office equipment
10% - 18%
Computers
20% - 50%
Electrical installation
10%
Motor vehicles
18% - 20%
Depreciation on capital expenditure in progress commences when the assets are ready for their
intended use.
The residual value, useful life and depreciation method are reviewed at the end of each reporting
period 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
items of property, plant and equipment.
Fully depreciated items of property, plant and equipment are retained in the accounts until the item
are no longer in use.
Upon the disposal of an item of property, plant and equipment, the difference between the net
disposal proceeds and its carrying amount is recognised in profit or loss.
3.3
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of
a specific asset or the arrangement conveys a right to use the asset, even if that right is not explicitly
specific in an arrangement.
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2014 (CONT’D)
Pentamaster Corporation Berhad
(572307-U)
•
Annual Report 2014
50
