NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
64
CITIC ENVIROTECH LTD.
Annual Report
2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.9 Prepaid leases
Prepaid leases are stated at costs and are amortised, over the period of the leases, on a straight-line
basis to the statement of profit or loss and other comprehensive income. The land lease period is 50
years.
2.10 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. Such cost includes the
cost of replacing part of the property, plant and equipment and borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying property, plant and
equipment. 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 are stated at cost less accumulated
depreciation and any accumulated impairment loss. 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 lives and depreciation respectively. Likewise, when a major inspection is
performed, its cost is recognised in the carrying amount of the property, plant and equipment as
a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred.
Depreciation of an asset begins when it is available for use and is computed on a straight-line
basis to write off the cost of property, plant and equipment less estimated residual value over their
estimated useful lives. Assets under construction included in property, plant and equipment are not
depreciated as these assets are not available for use.
Depreciation is charged so as to write off the cost of assets less residual value over their estimated
useful lives, using the straight-line method, on the following bases:
Freehold building
-
5%
Leasehold building
-
3
1
/
3
%
Leasehold improvements
-
10% to 20%
Motor vehicles
-
10% to 20%
Plant and machinery
-
10% to 20%
Treatment plants
-
3% to 5%
Office equipment, furniture and fittings
-
10% to 20%
Depreciation is not provided on freehold land and construction-in-progress.
The estimated useful lives, residual values and depreciation method are reviewed at each year end,
with the effect of any changes in estimate accounted for on a prospective basis.
Fully depreciated assets still in use are retained in the financial statements.
Assets held under finance lease arrangements are depreciated over their expected useful lives on the
same basis as owned assets or, where shorter, the term of the relevant leases.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amounts of the asset and
is recognised in profit or loss.
