Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises
the purchase price, borrowing cost (if capitalisation criteria are met) and any attributable
costs of bringing the asset to its working condition for its intended use. Any trade discount
and rebates are deducted in arriving at the purchase price. Subsequent costs are included
in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits attributable to such subsequent cost
associated with the item will flow to the Company. All other repair and maintenance costs
are recognised in statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis,
interest expenses included in deferred payment is recognised as interest expense and not
included in cost of asset.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided on the straight-line method
prescribed under Schedule II of the Act, computed on the basis of useful lives prescribed
under Schedule II of the Act or technical evaluation of the property, plant and equipment
by the management and/or external technical expert which are mentioned below:
each financial year end and adjusted prospectively, if appropriate.
Where, during any financial year, any addition has been made to any asset, or where any
asset has been sold, discarded, demolished or destroyed, or significant components
replaced; depreciation on such assets is calculated on a pro rata basis as individual assets
with specific useful life from the month of such addition or, as the case may be, up to the
month on which such asset has been sold, discarded, demolished or destroyed or replaced.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is de-
recognised upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
included in the income statement when the asset is derecognized.
Intangible assets
Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated amortization
and accumulated impairment losses, if any.
Subsequent measurement (amortisation and useful lives)
All intangible assets are accounted for using the cost model whereby capitalised costs are
amortised on a straight-line basis over their estimated useful lives. The estimated useful
life of an identifiable intangible asset is based on a number of factors including the effects
of obsolescence, demand, competition, and other economic factors (such as the stability of
the industry, and known technological advances), and the level of maintenance
expenditures required to obtain the expected future cash flows from the asset.
Residual values and useful lives are reviewed at each reporting date. The following useful
lives are applied:
The amortisation period and the amortisation method for intangible assets are reviewed at
least at the end of each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as
changes in accounting estimates.
Intangible assets with indefinite useful lives like goodwill acquired in business combination
are not amortised, but are tested for impairment annually, either individually or at the cash
generating unit level. The assessment of indefinite useful life is reviewed annually to
determine whether indefinite life continues to be supportable. The change in useful life
from indefinite to finite life if any, is made on prospective basis.
De-recognition
Gains or losses arising from derecognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and are
recognised in the statement of profit or loss when the asset is derecognised.
Impairment of non-financial assets
For impairment assessment purposes, assets are grouped at the lowest levels for which
there are largely independent cash inflows (cash generating units). As a result, some
assets are tested individually for impairment and some are tested at cash- generating unit
level.
The Company assesses at each balance sheet date whether there is any indication that an
asset may be impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognized in the statement of profit and loss. If at
the balance sheet date, there is an indication that a previously assessed impairment loss
no longer exists then the recoverable amount is reassessed, and the asset is reflected at
the recoverable amount subject to a maximum of depreciated historical cost. Impairment
losses previously recognised are accordingly reversed in the statement of profit and loss.
To determine value-in-use, management estimates expected future cash flows from each
cash-generating unit and determines a suitable discount rate in order to calculate the
present value of those cash flows. The data used for impairment testing procedures are
directly linked to the Company’s latest approved budget, adjusted as necessary to exclude
the effects of future re-organisations and asset enhancements. Discount factors are
determined individually for each cash- generating unit and reflect current market
assessment of the time value of money and asset-specific risk factors.
