107 / 174
financiAL STATEMENTs
Annual Report 2017
105
NOTES TO THE FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)
2.3 Summary of Significant Accounting Policies (Cont’d.)
(f)
Biological Assets - Oil Palm Planting Expenditure
All expenses incurred in land preparation, planting and developing of oil palm up to maturity are capitalised as
biological assets. A portion of the indirect overheads which include general and administrative expenses incurred on
immature plantation is similarly capitalised under biological assets until such time when the plantation attains maturity
at the age of 36 months. All expenses subsequent to maturity are recognised in the profit or loss. Upon attaining
maturity, oil palm planting expenditure is amortised over 20 years. Replanting expenditure and nursery assets are
capitalised under oil palm planting expenditure in the year in which they are incurred until maturity.
(g) Investment Properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or for both.
Such property is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
property except for freehold land is stated at cost less accumulated depreciation and any accumulated impairment
losses. Freehold land has an unlimited useful life and therefore is not depreciated.
Depreciation of investment properties is provided for on a straight-line basis to write off the cost of the property to its
residual value over its estimated useful life, at the following annual rates:
Freehold building
2%
Leasehold building
2% to 3%
Leasehold land
Over lease period
The residual values, useful life and depreciation method are reviewed at each financial year-end 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 investment property.
An investment property is derecognised when either it has been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses
on the retirement or disposal of an investment property are recognised in the profit or loss in the year in which they
arise.
(h) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill
is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
(i)
Impairment of Non-financial Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate
of the asset’s recoverable amount.