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Annual Report 2015
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Property, plant and equipment (cont’d)
Depreciation (cont’d)
Depreciation is recognised as an expense in the statement of comprehensive income and statement of total return on
a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment,
unless it is included in the carrying amount of another asset. Freehold land is not depreciated.
Depreciation is recognised from the date that the property, plant and equipment are installed and are ready for use.
The estimated useful lives for the current year is as follows:
• leasehold land
The remaining useful lives of land lease
• buildings
50 years or the remaining useful lives of land lease
• plant and machinery
10 - 12 years
• furniture and fixtures
7 years
• motor vehicles and boats
5 years
• office equipment
5 years
• computers
5 years
Capital works-in-progress are not depreciated as these assets are not yet available for use.
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted
if appropriate.
3.4 Prepaid land lease
Prepaid land lease relates to upfront payment on long-term leasehold interests in land. These payments are stated at
cost and are amortised on a straight-line basis over the respective period of the lease.
3.5 Investment properties
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale
in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Investment properties are measured at cost on initial recognition and subsequently at fair value with any changes
therein recognised in the statement of total return. The cost of a purchased property comprises its purchase price
and any directly attributable expenditure including transaction costs. Fair value is determined in accordance with the
H-REIT Trust Deed, which requires the investment properties to be valued by independent registered valuers in the
following events:
• at least once a year in accordance with the Property Funds Appendix of CIS Code issued by MAS; and
• where the H-REIT Manager proposes to issue new units for subscription or to redeem existing units unless the
investment properties have been valued not more than 6 months ago.
When an investment property is disposed of, the resulting gain or loss recognised in the statement of total return is the
difference between net disposal proceeds and the carrying amount of the property.
Investment properties are not depreciated. The properties are subject to continued maintenance and regularly revalued
on the basis set out above. For taxation purposes, the H-REIT Group may claim capital allowances on assets that qualify
as plant and machinery under the income tax laws of the countries in which the investment properties are located.
When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date
of reclassification becomes its cost for subsequent accounting.
NOTES TO THE FINANCIAL STATEMENTS
