NewWorld Development Company Limited
FINANCIAL SECTION
118
3 PRINCIPAL ACCOUNTING POLICIES
(continued)
(f) Property, plant and equipment
(continued)
(ii) Depreciation
No depreciation is provided on assets under construction until such time when the relevant assets are
completed and available for intended use.
Leasehold land classified as finance lease commences amortisation from the time when the land interest
becomes available for its intended use. Amortisation on leasehold land classified as finance lease and
depreciation on other assets is calculated using the straight-line method to allocate their cost to their
residual values over their estimated useful lives, as follows:
Leasehold land classified as finance lease
Shorter of remaining lease term of 10 to over 50 years
or useful life
Buildings
20 to 40 years
Other assets
2 to 25 years
The residual values and useful lives of the assets are reviewed, and adjusted if appropriate, at the end of
each reporting period.
(iii) Gain or loss on disposal
The gain or loss on disposal of property, plant and equipment is determined by comparing the difference
between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the
consolidated income statement.
(g) Impairment of interests in subsidiaries, joint ventures, associated companies and non-
financial assets
Non-financial assets that have an indefinite useful life, for example goodwill, or have not yet been available for
use are not subject to amortisation and are tested annually for impairment. Assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
The carrying amount of an asset is written down immediately to its recoverable amount if the carrying
amount of the asset is greater than its estimated recoverable amount. An impairment loss is recognised in
the consolidated income statement for the amount by which the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the higher of its fair value less costs to sell and value in use.
For the purpose of assessing impairment, assets are grouped as cash-generating units for which there are
separately identifiable cash flows. Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at the end of each reporting period.
Impairment testing of the interests in subsidiaries, joint ventures or associated companies is required upon
receiving dividends from these interests if the dividend exceeds the total comprehensive income of the
subsidiary, joint venture or associated company in the period the dividend is declared or if the carrying amount
of the interest in the separate financial statements exceeds the carrying amount in the consolidated financial
statements of the investee’s net assets including goodwill.
(h) Investments
The Group classifies its investments in the categories of financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments, and available-for-sale financial assets. Management
determines the classification of its investments at initial recognition depending on the purpose for which the
investments are acquired.
