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Fima Corporation Berhad
(21185-P)
financial statements
104
NOTES TO THE FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)
2.3 Summary of Significant Accounting Policies (Cont’d.)
(e) Property, Plant and Equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and
equipment is recognised as an asset, if and only if, 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.
Subsequent to recognition, property, plant and equipment except for certain freehold land and buildings are measured
at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property,
plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets
with specific useful life and depreciation, respectively. Likewise, when a major inspection is performed, its cost is
recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria is satisfied.
All other repair and maintenance costs are recognised in profit or loss as incurred.
Freehold land and buildings other than office buildings are stated at revalued amount, which is the fair value at the
date of the revaluation less any accumulated impairment losses. Revaluations are made at least once in every five
years based on a revaluation by an independent valuer on an open market value basis. Any revaluation surplus is
credited to the revaluation reserve included within equity, except to the extent that it reverses a revaluation decrease
for the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss to
the extent of the decrease previously recognised.
A revaluation deficit is first offset against unutilised previously recognised revaluation surplus in respect of the same
asset and the balance is thereafter recognised in profit or loss. Upon disposal or retirement of an asset, any revaluation
reserve relating to the particular asset is transferred directly to retained earnings.
Freehold land has an unlimited useful life and therefore is not depreciated. Land held on long lease is held on a lease
with an unexpired period of 50 years or more. A lease of less than 50 years is described as a short lease.
Other property, plant and equipment is depreciated on a straight-line basis to write- off the cost of each asset to its
residual value over the estimated useful life, at the following annual rates:
Leasehold land
Over lease period
Buildings
2% to 10%
Plant and machinery
10% - 25%
Factory and office renovations
2% to 20%
Equipment, furniture and fittings and motor vehicles
10% - 33.3%
Assets under construction or capital work-in-progress included in property, plant and equipment are not depreciated
as these assets are not yet available for use.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted
prospectively if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the
year the asset is derecognised.