TAN CHONG MOTOR HOLDINGS BERHAD
Annual Report 2014
62
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
(d) Property, plant and equipment (continued)
(iii) Depreciation (continued)
The estimated useful lives for the current and comparative periods are as follows:
Plant, machinery and equipment
4 - 10 years
Furniture, fixtures, fittings and office equipment
3 - 10 years
Motor vehicles
5 years
Renovation
5 - 8 years
Rough road
5 years
Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and
adjusted as appropriate.
(e) Leased assets
(i)
Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of
ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an
amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent
to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that
asset
.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent
lease payments are accounted for by revising the minimum lease payments over the remaining term of the
lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment or as
investment property if held to earn rental income or for capital appreciation or for both.
(ii) Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewards of
ownership are classified as operating leases and, except for property interest held under operating lease,
the leased assets are not recognised on the statement of financial position. Property interest held under
an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as
investment property and measured using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease
expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period
in which they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments. The
payments are amortised over the lease terms which are not more than 45 years.
