LENMED AIR 2019.pdf

3.9 Property, plant and equipment Property, plant and equipment is initially recorded at cost including any costs directly attributable to bringing the assets to the location and conditions necessary for them to be fully operation, less accumulated depreciation and any impairment losses. Property, plant and equipment include any costs directly attributable to bringing the assets to the location and condition necessary for them to operate. The residual value represents the best estimate of the current recoverable amount of the asset at the end of its useful life. Property, plant and equipment is depreciated to estimated residual value on a straight line basis over the asset’s expected useful lives. Land is not depreciated. Buildings are depreciated to their estimated residual value. The depreciation method, estimated remaining actual useful lives and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining lives of the assets and projected disposal values. The following are the current estimated useful lives: Land Indefinite Buildings 50 years Leasehold improvements Written off over the period of lease Plant & Equipment 10-20 years Motor vehicles 5 years Computer Equipment 3-8 years Office Equipment 10-20 years Furniture & Fittings 10-20 years Gains or losses on disposal of assets are calculated as the fair value of the consideration received less the carrying amount at the date of sale and are recognised in profit and loss. 3.10 Impairment of a non-financial asset The carrying amounts of the assets other than deferred tax assets, inventory and financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the recoverable amount is estimated as the higher of the net selling price and value in use. For goodwill and intangible assets that have an indefinite useful life the recoverable amount is estimated at least annually. In assessing value in use, the expected future cash flows are discounted to present value using pre-tax discount rates that reflects current market assessments of the time value of money and the risk specific to the asset. An impairment loss is recognised whenever the carrying amount exceeds the recoverable amount. Impairment losses and reversals of impairment losses are separately disclosed in profit and loss. A previously recognised impairment loss is reversed if there has been a change in the estimate used to determine the recoverable amount, however not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior years. An impairment loss in respect of goodwill is not reversed. 3.11 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and when a reliable estimate can be made of the amount of the obligation. Where the effect of discounting is material, provisions are discounted. The discount rate used is a pre-tax rate that reflects current market assumptions of the time value of money and are risk specific where appropriate. 3.12 Employee benefits Short-term employee benefits The cost of all short-term benefits is recognised during the period in which the employee renders the related service. The provisions for employee entitlements to wages, salaries and annual leave represent the amount which the Group has a present obligation to pay as a result of the employees’ services provided during the reporting date. The provisions have been calculated at undiscounted amounts based on current wage and salary rates. Retirement benefits The Group contribute to defined contribution funds on behalf of its employees. Contributions are charged against profit or loss as incurred. 3.13 Borrowings Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost, using the effective interest rate method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings as interest. LENMED ANNUAL INTEGRATED REPORT 2019 101

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