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Annual Report 2014 | S P SETIA BERHAD GROUP | 123

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(h) Property, plant and equipment (cont’d)

(ii) Depreciation

Freehold land and capital work-in-progress are not depreciated.

Depreciation is calculated to write off the depreciable amount of other property, plant and equipment on a straight-line basis

over their estimated useful lives. The depreciable amount is determined after deducting residual value from cost.

The principal annual rates used for this purpose are:

Freehold buildings

1% - 2%

Plant, machinery, cranes and trucks

20%

Office equipment, renovations, furniture and fittings

10% - 40%

Motor vehicles

16%

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

(i) 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. Investment properties

include properties that are being constructed or developed for future use as investment properties.

(i) Measurement basis

Investment properties are stated at cost less accumulated depreciation and 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 cost of the asset can be measured reliably. The carrying amount of the replaced

part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial year in which they are

incurred.

Investment properties are derecognised upon disposal or when they are permanently withdrawn from use and no future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.