Defined benefit plan
The Company’s net obligation in respect of its defined benefit retirement plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current financial year and prior periods; the benefit is discounted to determine the present value. Any unrecognised past service costs and the fair value of the plan assets are deducted. The discount rate is the yield at the end of the financial year on high quality corporate bonds or government bonds that have maturity date approximating the terms of the Company’s obligation and are denominated in the same currency in which benefits are expected to be paid.
The calculation is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
When the benefits of the plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.
In calculating the Company’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, if any, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised.
The latest actuarial valuation was performed in Year 2008.
Government grants are recognised at fair value when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Grants related to purchase of assets are treated as deferred income and allocated to income statement over the useful lives of the related assets while grants related to expenses are treated as other income in the income statement.
Intangible Asset – Trademarks
Trademarks acquired have finite useful lives and are carried at cost less any accumulated amortisation and any accumulated impairment losses.
Amortisation is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives of 7 years. Cost of renewing trademarks is recognised in the income statements as incurred.
Property construction-in-progress is stated at cost and not depreciated. The property would be transferred to property, plant and equipment or investment property (depending on the intended purpose and use of the property) upon completion.
Note: The balance of unrecognized amount of property construction-in-progress compared to the contracted full price is disclosed as capital commitment
Capital work-in-progress is stated at cost and not depreciated. Depreciation on capital work-in-progress commences when the assets are ready for their intended use.
Note: This is usually disclosed as an asset category of property, plant and equipment. The balance of unrecognized amount of capital work-in-progress compared to the contracted full price is disclosed as capital commitment
Research and Development Expenditure
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:-
its ability to measure reliably the expenditure attributable to the asset under development;
the product or process is technically and commercially feasible;
its future economic benefits are probable;
its ability to use or sell the developed asset;
the availability of adequate technical, financial and other resources to complete the asset under development; and
its intention to complete the intangible asset and use or sell.
Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as assets in the subsequent period. The development expenditure is amortised on a straight-line method over a period of not exceeding 5 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.
Industrial Operating Right
Industrial operating right represent costs incurred by the Company to obtain the certifications for developed capabilities to design, construct and develop component for low-voltage switchboards to meet international standards. As such certificate obtained do not have any expiry date, the Company does not amortise costs incurred, instead impairment is tested annually or more frequently if events or changes in circumstances indicate that the industrial operating right might be impaired.