NOTES TO FINANCIAL STATEMENTS
30 June 2015
Karin Technology Holdings Limited
Annual Report 2015
64
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
Property, plant and equipment, other than construction in progress, are stated at cost or valuation less accumulated
depreciation and any accumulated impairment losses. The cost of an item of property, plant and equipment
comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and
location for its intended use.
Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs
and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the
recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of
the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced
at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ
materially from its carrying amount. Changes in the values of property, plant and equipment are dealt with as
movements in the land and buildings revaluation reserve. If the total of this reserve is insufficient to cover a deficit,
on an individual asset basis, the excess of the deficit is charged to profit or loss. Any subsequent revaluation
surplus is credited to profit or loss to the extent of the deficit previously charged. On disposal of a revalued
asset, the relevant portion of the land and buildings revaluation reserve realised in respect of previous valuations
is transferred to retained profits as a movement in reserves.
Depreciation is calculated on the straight-line basis to write off the cost or valuation of each item of property,
plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this
purpose are as follows:
Leasehold land and buildings
Over the lease terms or 5%, whichever is shorter
Leasehold improvements
20%
Furniture and fixtures
20%
Office equipment
30%
Motor vehicles
25%
Where parts of an item of property, plant and equipment have different useful lives, the cost or valuation of that
item is allocated on a reasonable basis among the parts and each part is depreciated separately.
Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at
each financial year end.
An item of property, plant and equipment including any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal
or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net
sales proceeds and the carrying amount of the relevant asset.
Construction in progress represents renovation works in progress for a building, which is stated at cost less
any accumulated impairment losses, and is not depreciated. Cost comprises the direct costs of construction.
Construction in progress is reclassified to the appropriate category of property, plant and equipment when
completed and ready for use.
