Notes to the Consolidated Financial Statements - Seylan Bank
Notes to the Consolidated Financial Statements - Seylan Bank
Notes to the Consolidated Financial Statements - Seylan Bank
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278 North Bound > <strong>Seylan</strong> <strong>Bank</strong> Annual Report 2011<br />
<strong>Notes</strong> <strong>to</strong> <strong>the</strong> <strong>Consolidated</strong> <strong>Financial</strong> <strong>Statements</strong><br />
Subsequent Costs<br />
The cost of replacing part of an item of Property, Plant & Equipment is recognised in <strong>the</strong> carrying amount<br />
of <strong>the</strong> item if it is probable that <strong>the</strong> future economic benefits embodied within that part will flow <strong>to</strong> <strong>the</strong> <strong>Bank</strong><br />
and its cost can be reliably measured. The carrying amount of <strong>the</strong> replaced part is derecognised. The costs<br />
of day-<strong>to</strong>-day servicing of Property, Plant & Equipment are recognised in profit or loss as incurred.<br />
Derecognition<br />
The carrying amount of an item of Property, Plant & Equipment is derecognised on disposal or when no future<br />
economic benefits are expected from its use or disposal. The gain or loss arising from <strong>the</strong> derecognition of an<br />
item of Property, Plant & Equipment is included in Income Statement when <strong>the</strong> item is derecognised. When<br />
replacement costs are recognised in <strong>the</strong> carrying amount of an item of Property, Plant and Equipment, <strong>the</strong><br />
remaining carrying amount of <strong>the</strong> replaced part is derecognised. Major inspection costs are capitalised. At<br />
each such capitalisation, <strong>the</strong> remaining carrying amount of <strong>the</strong> previous cost of inspections is derecognised.<br />
Depreciation<br />
Depreciation is recognised in profit or loss on straight-line basis over <strong>the</strong> estimated useful lives of each part<br />
of an item of Property & Equipment since this most closely reflects <strong>the</strong> expected pattern of consumption of<br />
<strong>the</strong> future economic benefits embodied in <strong>the</strong> assets. Leased assets under finance leases are depreciated<br />
over <strong>the</strong> shorter of <strong>the</strong> lease term and <strong>the</strong>ir useful lives. Land is not depreciated.<br />
The estimated useful lives for <strong>the</strong> current and comparative periods are as follows:<br />
Life Period (Years) Rate (%)<br />
Freehold Building 40 2.5<br />
Mo<strong>to</strong>r Vehicles 5 20<br />
Computer Equipment 6 16.67<br />
Office Equipment, Furniture & Fittings 3-10 10-33 1/3<br />
The rate of depreciation of freehold buildings was revised with effect from 01st January 1999 (from 4% <strong>to</strong><br />
2.5%). Freehold buildings purchased prior <strong>to</strong> 01st January 1999 have been depreciated over <strong>the</strong> remaining<br />
useful life, based on <strong>the</strong> revised depreciation rates. Freehold buildings purchased after 01st January 1999<br />
have been depreciated, based on revised rates.<br />
Depreciation methods, useful lives and residual values are reassessed at each financial year end and<br />
adjusted appropriately.<br />
Leasehold building has been depreciated over <strong>the</strong> useful economic life as <strong>the</strong> lease period is greater than<br />
<strong>the</strong> useful life of <strong>the</strong> asset.<br />
Depreciation of an asset begins when it is available for use and ceases at <strong>the</strong> earlier of <strong>the</strong> date that <strong>the</strong><br />
asset is classified as held for sale and <strong>the</strong> date that <strong>the</strong> asset is derecognised.<br />
<strong>Seylan</strong> Developments PLC<br />
Property, Plant & Equipment are recorded at cost of purchase or valuation <strong>to</strong>ge<strong>the</strong>r with any incidental<br />
expenses <strong>the</strong>reon. The assets are stated at cost or valuation, less accumulated depreciation which is<br />
provided for on <strong>the</strong> basis specified below.