L a p o r a n T a h u n a n 2 0 0 0 A n n u a l R e p o r t - ChartNexus

Notes to the Financial Statements (continued)For the financial period of seventeen months ended 31 December 20003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(g)Property, plant and equipment (continued)The effect on the financial statements of this change in accounting estimates is an increase in depreciationc h a rged for the financial period for the Group and the Company by RM1,646,085 and RM611,238respectively. Accordingly, profits from ordinary activities before taxation of the Group and of the Companywill decrease by the said amounts respectively.Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised aspart of the cost of the asset during the period of time that is required to complete and prepare the asset forits intended use.(h)Subsidiary companiesInvestments in subsidiary companies are stated at valuation based on the net tangible assets value of thes u b s i d i a ry companies. Acquisitions subsequent to valuation date are stated at cost until the nextrevaluation. A valuation will be conducted at least once in every five years.An increase in carrying amount arising from revaluation of investments in subsidiary companies is crediteddirectly to shareholders’ equity as non-distributable revaluation reserves. To the extent that a decrease inc a rrying amount offsets a previous increase, for the same investment, that has been credited to nondistributablerevaluation reserves and not subsequently reversed or utilised, it is charged against that nondistributablerevaluation reserves. In all other cases, a decrease in carrying amount is charged to theincome statement. An increase on revaluation which is directly related to a previous decrease in carryingamount for the same investment that was charged to the income statement, is credited to the incomestatement to the extent that it offsets the previously recorded decrease.On disposal of any particular subsidiary company, amounts in non-distributable revaluation reserves relatingto this subsidiary company, if any, are transferred to distributable revaluation reserves.A provision is made when the Directors are of the view that there is a permanent diminution in the valueof the investments. Permanent diminution in value of an investment is recognised as an expense in thefinancial period in which the diminution is identified.(i)InvestmentsInvestments in associated companies, jointly controlled entities and other non-current investments are shownat cost and provision is only made where, in the opinion of the Directors, there is a permanent diminutionin value. Permanent diminution in the value of an investment is recognised as an expense in the financialperiod in which the diminution is identified.On disposal of an investment, the difference between net disposal proceeds and its carrying amount ischarged or credited to the income statement.(j)ReceivablesReceivables are carried at anticipated realisable value. Bad debts are written off in the financial period inwhich they are identified. An estimate is made for doubtful debts based on a review of all outstandingamounts at the end of the financial period.(k)Deferred taxationProvision is made using the liability method for taxation deferred by timing differences except where the taxeffect of such timing differences are expected to be deferred indefinitely.Deferred tax asset represents the tax benefit arising from the surplus between the market value and thebook value of the land at the date of transfer of land from property, plant and equipment to developmentproperties. The deferred tax asset is recognised to the extent of the amount of real property gains taxpayable on the transfer of land from property, plant and equipment to development properties. The amountwill be charged to the income statement upon the sale or progress billings of the related developmentproperties.46