Annual Report (Complete) - MYCRON Steel Berhad

Notes to the Financial Statements
30 June 2010
(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
Property, plant and equipment (continued)
(i)
Measurement basis (continued)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when 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. The carrying amount of the replaced part is derecognised. All other repairs and
maintenance are charged to the income statement during the period in which they are incurred.
Surpluses arising on revaluation are dealt with through the asset revaluation reserve account. Any deficit arising is
set-off against the asset revaluation reserve to the extent of a previous increase for the same asset. In all other cases,
a decrease in carrying amount will be charged immediately to the income statement.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included
in the profit/(loss) from operations. On disposal of revalued assets, amounts in revaluation reserve relating to those
assets are transferred to retained earnings.
At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indication
exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write-down
is made if the carrying amount exceeds the recoverable amount.
(ii)
Depreciation
Freehold land is not depreciated as it has infinite life. All other property, plant and equipment are depreciated on a
straight line basis to write off the cost or their revalued amounts, to their residual value over their estimated useful lives
as follows:
Buildings
Plant, machinery and electrical installation
Motor vehicles, furniture, fittings and office equipment
Years
50 years
4 – 40 years
10 years
Depreciation on assets under construction commences when the assets are ready for their intended use.
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.
(e)
Financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its financial assets at initial
recognition and re-evaluates this at every reporting date except for financial assets at fair value through profit or loss.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise when the Group provides money, goods or services directly to a debtor with no
intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months
after the balance sheet date. These are classified as noncurrent assets. Loans and receivables comprise of “trade
and other receivables” and “deposits, bank and cash balances” in the balance sheet.
(ii)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in
any of the other categories. They are included in non-current assets unless management intends to dispose of the
investment within 12 months of the balance sheet date.
Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs that are directly attributable
to their acquisitions for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value
through profit or loss is initially recognised at fair value, and transaction costs are expensed in the income statement.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
pg 57 | Mycron Steel Berhad