Annual Report - QuamIR

Notes to the Consolidated Financial Statements (Continued)
2 Summary of significant accounting policies (Continued)
2.5 Property, plant and equipment
Properties are interests in land and buildings other than
investment properties. Leasehold land classified as finance lease,
buildings, water utility plant and equipment, electric utility plant
and equipment, other plant and equipment, comprising plant
and machineries, motor vehicles and furniture and fixtures are
stated at cost less accumulated depreciation and accumulated
impairment losses. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
2
2.5
No depreciation is provided on properties under development.
Leasehold land classified as finance lease commences
amortisation from the time when the land interest becomes
available for its intended use. Amortisation on leasehold land
classified as finance lease and depreciation on other assets is
calculated using the straight-line method to allocate their cost to
their residual values over their estimated useful lives, as follows:
Leasehold land classified
as finance lease
shorter of remaining lease
term or useful life
50
15
20
315
Buildings
Water utility plant and equipment
Electric utility plant and equipment
Other plant and equipment
50 years
15 years
20 years
3 to 15 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
All direct and indirect costs relating to the construction of
property, plant and equipment, including borrowing costs during
the construction period are capitalised as the costs of the assets,
which are classified as construction in progress. No depreciation
is provided on construction in progress until such times as the
relevant assets are completed and available for intended use.
Subsequent costs are included in the carrying amount of the
asset 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 item can be
measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged in
the consolidated income statement during the financial period in
which they are incurred.
90 HKC (Holdings) Limited • Annual Report 2011