Plantation Development Expenditure
Plantation development expenditure comprises assets held for plantation development activities. These assets include land and buildings used for the purpose of plantation development, infrastructure costs such as roads and bridges attached on the plantation estates, cost of planting and development of crops.
This is stated at cost less accumulated depreciation and impairment losses, if any. Freehold land is stated at cost and is not depreciated.
Depreciation is calculated on the straight-line method to write off the cost over their estimated useful lives. The principal annual rates of depreciation are:
Freehold buildings 2%
Leasehold buildings over the lease period
Bridges and roads 5%
Mature plantations 25 years
Cost of preparation of agriculture land, planting, replanting and upkeep of crops, together with other incidental costs are capitalised as immature plantations and transferred to mature plantations account when the trees have matured and meet the criteria for commercial production.
Mature plantations are amortised over the estimated productive life of the trees estimated to be 25 years. The period of the plantations’ yield was determined by vegetative growth calculated and estimated by the management.
Replanting expenditure is expensed to the income statement immediately in the year in which the expenditure is incurred.