Eng - IOI Group

notestothefinancialstatements cont’d3 SIGNIFICANT ACCOUNTING POLICIES cont’d3.7 Leases cont’dOperating leaseLeases of assets under which all the risks and benefits of ownership are retained by the lessor are classifiedas operating leases. Payments made under operating leases are charged to the income statement on astraight-line basis over the period of the lease.3.8 New Planting and Replanting ExpenditureNew planting expenditure, which represents total cost incurred from land clearing to the point of harvesting,is capitalised under plantation development expenditure. Replanting expenditure, which represents costincurred in replanting old planted areas, is written off to the income statement in the financial year it isincurred.3.9 Investment PropertiesInvestment properties are stated at cost upon completion of the construction or acquisition. These propertiesare held for their investment potential and rental income and are therefore not depreciated. These propertieswill be revalued at regular intervals of at least once in every 5 years with additional valuation in theintervening years where market conditions indicate that the carrying value of the revalued asset is materiallydifferent from the market value. Surpluses arising from such valuation will be credited to shareholders’ equityas revaluation surplus and any deficit will be charged against such surplus to the extent that decrease offsetany increase. In all other cases, the deficit will be charged to the income statement.On disposal of investment properties, the difference between the net disposal proceeds and its carryingamount is charged or credited to the income statement and the related amounts in revaluation surplus, ifany, is transferred to retained profits.3.10 Land Held For DevelopmentLand held for development is stated at cost less impairment losses, if any and is reclassified as developmentproperty upon commencement of development work on the said land.3.11 Borrowing CostsIOI Corporation BerhadAnnual Report 2003142Costs incurred on external borrowings to finance new planting expenditure and other long term qualifyingassets are capitalised until the assets are ready for their intended use after which such expenses are chargedto the income statement.