Notes to the Consolidated Financial Statements - Seylan Bank

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