Tag: property plant and equipment

Sample Disclosure – Change In Accounting Policy On Property, Plant and Equipment (21 August 2009)

Change In Accounting Policy

On 1 January 2009, the Company changed its accounting policy on the measurement of its freehold land and buildings form cost model to revaluation model. Pursuant to FRS 116: Property, Plant and Equipment, the revaluation has not been dealt with as a prior year adjustment in accordance with FRS 108: Accounting Policies, Change In Accounting Estimates and Errors, but instead treated as revaluation made during the year.

The effect of the change is as follows:-

Balance sheet as at 1 January 2009

Increase/(decrease)
 

RM
Property, plant and equipment

4,750,000
Asset revaluation reserve

4,750,000
Deferred tax liability

250,000

Sample Disclosure – Note on Property, Plant and Equipment (4 December 2008)

PROPERTY, PLANT AND EQUIPMENT

 

Freehold land and buildings

Furniture & fittings

Total
 

$

$

$
 

 

 

 
At day/month/year (beginning) and day/month/year (end)

xxx,xxx

xxx,xxx

xxx,xxx
Valuation

x,xxx,xxx

–

x,xxx,xxx
Cost

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx
       
Accumulated depreciation      
At day/month/year (beginning)

x,xxx

x,xxx

x,xxx
Charge for the financial year (current year)

x,xxx

x,xxx

x,xxx
At day/month/year (end)

xx,xxx

xx,xxx

xx,xxx
       
Net Book Value at day/month/year (end)

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx
       
       
Net Book Value at day/month/year (beginning)

x,xxx,xxx

x,xxx,xxx

x,xxx,xxx
       
Depreciation charge for the financial year      
ended day/month/year (previous year)

x,xxx

x,xxx

x,xxx
       
*Analysis of valuation of land :      
If freehold land had not been revalued, it would have been included in the following amounts:  
       
   

Current year

Previous year
   

$

$
       
At cost:      
Freehold land  

xx,xxx

xx,xxx
       
       

The freehold land was revalued by the Directors based on an open market value basis on day/month/year (date of valuation).

The net book value of assets under hire purchase financiang amounted to $xx,xxx (Previous year: $xx,xxx).

Sample Disclosure – Property, Plant and Equipment (27 November 2008)

Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount 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 the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Freehold land has an unlimited useful life and therefore is not depreciated. Capital­work-in-progress is not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 2%

Plant, machinery, mould, die and laboratory equipment 10%

Office equipment, fixtures, fittings, renovations and computers 10% – 20%

Motor vehicles 20%

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in income statement.