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Annual Report 2014 | S P SETIA BERHAD GROUP | 125

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Concession assets

Concession assets are recognised to the extent that the Group has acquired development rights or a right (a licence) to charge users

of public services.

Development rights are derecognised as and when the rights are exercised. Licences are amortised on a systematic basis over its

useful life.

Concession assets are stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and

measurement of impairment losses is in accordance with 1(q)(iii) below.

Amortisation of the concession assets begins when it is available for use, which means when it is in the location and condition

necessary for it to be capable of operating in the manner intended by management.

Gains or losses arising from derecognition of a concession asset are measured as the difference between the net disposal proceed

and the carrying amount of the asset and is recognised in profit or loss when the asset is derecognised.

(l) Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments for the right to use

an asset for an agreed period of time.

(i) Finance lease

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or

may not eventually be transferred.

Property, plant and equipment acquired by way of finance leases are stated at amounts equal to the lower of their fair values

and the present value of minimum lease payments at the inception of the leases, less accumulated depreciation and any

impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if

this is determinable; if not, the Group’s incremental borrowing rate is used.

(ii) Operating lease

An operating lease is a lease other than a finance lease.

Operating lease income or operating lease rentals are credited or charged to profit or loss on a straight-line basis over the period

of the lease.

(m) Development properties

Development properties are classified under two categories, i.e. land held for property development and property development

costs.

Land held for property development is defined as land on which development is not expected to be completed within the normal

operating cycle. Usually, no significant development work would have been undertaken on these lands other than infrastructure work,

earth work and landscape work incurred to put the land ready for development. Accordingly, land held for property development is

classified as non-current assets on the statement of financial position and is stated at cost plus incidental expenditure incurred to

put the land in a condition ready for development.