NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
90
COSCO Corporation (Singapore) Limited
2.
Significant accounting policies
(continued)
2.4
Property, plant and equipment (continued)
(a)
Measurement
(continued)
(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.
(b)
Depreciation
Depreciation on other items of property, plant and equipment is calculated using the straight-line
method to allocate their depreciable amounts over their estimated useful lives as follows:
Useful lives
Leasehold land and buildings
10 - 50 years
Office renovations, furniture, fixtures and equipment
3 - 5 years
Plant, machinery and equipment
3 - 20 years
Motor vehicles
5 - 10 years
Motor vessels
20 years
Docks and quays
40 - 50 years
No depreciation is provided for construction-in-progress.
The motor vessels are subject to overhauls at regular intervals. The inherent components of the
initial overhaul are determined based on the estimated costs of the next overhaul and are separately
depreciated over a period of two and a half years in order to reflect the estimated intervals between
two overhauls. The costs of the overhauls subsequently incurred are capitalised as additions and the
carrying amounts of the replaced components are written off to profit or loss.
On 1 January 2014, the Group revised its estimated useful lives of certain assets within leasehold
land and buildings, plant and machinery and docks and quays after conducting an operational
review of their useful lives. As a result, there was a change in the expected useful lives of these
assets. The change in accounting estimate has been applied prospectively subsequent to that
date. Accordingly, the adoption of the change in accounting estimate has no effect in prior years.
The net book value of property, plant and equipment as at 31 December 2014 has been increased
by approximately $37,393,000 and the profit before income tax for the financial year ended 31
December 2014 has been increased by approximately $37,393,000 by way of a decrease in
depreciation charge for the financial year as a result of the change. The impact of the change in
estimated useful lives for the next five years approximates that of the current financial year.
The residual values, estimated useful lives and depreciation method of property, plant and
equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of
any revision are recognised in profit or loss when the changes arise.
(c)
Subsequent expenditure
Subsequent expenditure relating to property, plant and equipment that has already been recognised
is added to the carrying amount of the asset only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
All other repair and maintenance expenses are recognised in profit or loss when incurred.
