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NOTES TO THE FINANCIAL STATEMENTS
F I N A N C I A L S TAT E M E N T S
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permanently withdrawn from use and no future economic benefit is expected from its disposal.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.