ANNUAL REPORT 2008 - Gorenje Group

145
is based on an independent appraisal report. The requirement for revaluation of land is reassessed
annually by the Company.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing
the proceeds from disposal with the carrying amount of property, plant and equipment and
are recognised net within “other operating income” in profit or loss. When the revalued asset is sold,
the amounts included in the revaluation reserve are transferred to retained earnings.
(ii) Reclassification to investment property
Property that is being constructed for future use as investment property is accounted for as property,
plant and equipment and measured at its cost until construction or development is complete,
at which time it is reclassified as investment property. Any gain or loss arising on re-measurement
to fair value is recognised in profit or loss.
(iii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company and its cost can be measured reliably. The carrying amount of the replaced
part is derecognised. All other costs (such as the day-to-day servicing of property, plant and equipment)
are recognised in profit or loss as incurred.
(iv) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of each part of an item of property, plant and equipment. Leased assets are depreciated over the
shorter of the lease term and their useful lives unless it is reasonably certain that the Company will
obtain ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
buildings
plant and equipment
computer equipment
transportation vehicles
office equipment
tools
34–50 years
5–20 years
2–5 years
5–14 years
5–10 years
5–8 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
(e) Intangible assets
(i) Goodwill
Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates and joint ventures
and is recognised within the cost of purchase.
(ii) Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved
products and processes. Development expenditure is capitalised only if development costs can be
measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete development
and to use or sell the asset. The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable to preparing the asset for its intend-