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NOTES TO THE FINANCIAL STATEMENTS
For the Ànancial year ended 31 December 2013
89
Annual Report 2013
F i nanc i a l Statement s
2. Significant accounting policies (continued)
2.3 Group accounting (continued)
(c) Associated companies (continued)
(iii) Disposals
Investments in associated companies are derecognised when the Group loses significant influence.
Any retained interest in the entity is remeasured at its fair value. The difference between the carrying
amount of the retained interest at the date when significant influence is lost and its fair value is
recognised in the income statement.
Gains and losses arising from partial disposals or dilutions in investments in associated companies in
which significant influence is retained are recognised in the income statement.
Please refer to the paragraph “Investments in subsidiaries and associated companies” for the
accounting policy on investments in associated companies in the separate financial statements of the
Company.
2.4 Property, plant and equipment
(a) Measurement
(i) Land and buildings
Land and buildings are initially recognised at cost. Freehold land is subsequently carried at cost less
accumulated impairment losses. Buildings and leasehold land are subsequently carried at cost less
accumulated depreciation and accumulated impairment losses.
(ii) Motor vessels
Motor vessels are initially recognised at cost and subsequently carried at cost less accumulated
depreciation and accumulated impairment losses.
The cost of motor vessels includes actual interest incurred on borrowings used to finance the motor
vessels while under construction and other direct relevant expenditure incurred in bringing the vessels
into operation. For this purpose, the interest rate applied to funds provided for constructing the motor
vessels is arrived at by reference to the actual rate payable on borrowings for construction purposes.
The capitalisation of interest charges will cease upon the completion and delivery of the motor
vessels.
(iii) Other property, plant and equipment
All other items of property, plant and equipment are initially recognised at cost and subsequently
carried at cost less accumulated depreciation and accumulated impairment losses.
(iv) Components of costs
The cost of an item of property, plant and equipment initially recognised includes its purchase
price and any cost that is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management. Cost also
includes borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset (Note 2.6). The projected cost of dismantlement, removal or restoration
is also recognised as part of the cost of property, plant and equipment if the obligation for the
dismantlement, removal or restoration is incurred as a consequence of either acquiring the asset or
using the asset for purpose other than to produce inventories.