124 | S P SETIA BERHAD GROUP | Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 October 2014
V. FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(i) Investment properties (cont’d)
Freehold land and investment properties under construction are not depreciated.
Depreciation is calculated to write off the depreciable amount of other investment properties on a straight-line basis over their
estimated useful lives. Depreciable amount is determined after deducting the residual value from the cost of the investment
The principal annual rates used for this purpose are:
Over the remaining period of the lease
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
(j) Service concession arrangements
The Group recognises revenue from the construction and upgrading of infrastructure projects under concession arrangements in
accordance with its accounting policy for construction contracts set out in 1(n) below. Where the Group performs more than one
service under the arrangement, consideration received or receivable is allocated to the components by reference to the relative fair
values of the services delivered, when the amounts are separately identifiable.
The Group recognises the consideration received or receivable as a financial asset to the extent that it has an unconditional right
to receive cash or another financial asset for the construction services. Financial assets are accounted for in accordance with the
accounting policy set out in 1(p) below.
The Group recognises the consideration receivable as a concession asset to the extent that it receives a right to charge users of the
public service. Concession assets are accounted for in accordance with the accounting policy set out in 1(k) below.
Subsequent costs and expenditures related to infrastructure and equipment arising from the Group’s commitments to the
concession contracts or that increase future revenue are recognised as additions to the concession asset and are stated at cost.
Capital expenditures necessary to support the Group’s operation as a whole are recognised as property, plant and equipment,
and accounted for in accordance with the policy stated under property, plant and equipment in 1(h) above. When the Group has
contractual obligations that it must fulfil as a condition of its license to:
maintain the infrastructure to a specified standard or,
restore the infrastructure when the infrastructure has deteriorated below a specified condition
It recognises and measures these contractual obligations in accordance with the accounting policy for provisions in 1(x) below.
Repairs and maintenance and other expenses that are routine in nature are expensed and recognised in profit or loss as incurred.