Basic HTML Version
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Property, plant and
equipment and depreciation
Property, plant and equipment
are stated at historical cost less
subsequent depreciation and
impairment, except for land, which
is shown at cost less impairment.
Land is not depreciated. Cost
includes expenditure that is directly
attributable to the acquisition of the
items.
Depreciation is calculated on the
straight-line method to write off the
cost of each asset over its estimated
useful life as follows:
Buildings: 50 years
Leasehold improvements:
over the period of the lease
Furniture, equipment and motor
vehicles: 3-10 years
Aircraft: 25 years
Depreciation is calculated separately
for each significant part of an asset
category. Where the carrying
amount of an asset is greater than
its estimated recoverable amount,
it is written down immediately to
its recoverable amount. The asset’s
residual value and useful life
are reviewed, and adjusted if
appropriate, at each statement of
financial position date.
Subsequent costs are included in
the asset’s carrying amount or are
recognised as a separate asset,
as appropriate, only when it is
probable that future economic
benefits associated with the item will
flow to the Group and the cost can
be measured reliably. All other
repairs and renewals are charged
to the consolidated statement of
income during the financial period
in which they are incurred.
Gains and losses on disposal of
property, plant and equipment are
determined by comparing proceeds
with carrying amounts. These are
included as other operating income
or expenses in the consolidated
statement of income.
Leases
Total payments made under
operating leases are charged to the
consolidated statement of income
on a straight-line basis over the
period of the lease. When an
operating lease is terminated before
the lease period has expired, any
payment required to be made
to the lessor by way of penalty is
recognised as an expense in the
period in which termination takes
place.
When a Group company is the
lessee of property, plant and
equipment and the Group has
substantially all the risks and
rewards of ownership, they are
classified as finance leases.
Finance leases are capitalised
at the inception of the lease at the
lower of the fair value of the leased
property or the present value of
the minimum lease payments. Each
lease payment is allocated between
the liability and finance charges so
as to achieve a constant rate on the
finance balance outstanding. The
corresponding rental obligations,
net of finance charges, are included
in payables. The profit element of
the finance cost is charged to the
consolidated statement of income
over the lease period. The asset
acquired under finance leases is
depreciated over the shorter of the
useful life of the asset or the
lease term.
When a Group company is the
lessor and assets are held subject
to a finance lease, the value of the
lease payments is recognised as a
receivable. The difference between
the gross receivable and the present
value of the receivable is recognised
as unearned finance income. Lease
income is recognised over the term
of the lease using the actuarial
method.
Provisions
Provisions are recognised when
the Group has a present legal or
constructive obligation as a result of
past events; it is more likely than not
that an outflow of resources
embodying economic benefits will
be required to settle the obligation;
and a reliable estimate of the
amount of the obligation can be
made. Provisions are measured at
the present value of management’s
best estimate of the expenditure
required to settle the obligation at
the statement of financial position
date.
Employee entitlements to annual
leave and long service leave are
recognised when they accrue to
employees. A provision is made for
the estimated liability for annual
leave and long-service leave as a
result of services rendered by
employees up to the statement of
financial position date.
Non-current-assets held
for sale
The Group classifies a non-current
asset (or disposal group) as held
for sale if its carrying amount will be
recovered principally through a
sale transaction rather than through
continuing use. A non-current asset
must be available for immediate
sale in its present condition subject
only to terms that are usual and
customary for sales of such assets
(or disposal groups). Its sale must
be planned and committed and
an active programme initiated to
locate a buyer and complete the
plan within one year. The asset
(or disposal group) must be
actively marketed for a price that is
reasonable in relation to its current
fair value.
A non-current asset held for sale is
carried at the lower of its carrying
amount and the fair value less
costs to sell. Impairment losses are
recognised through the consolidated
statement of income for any initial or
subsequent write down of the asset
(or disposal group) to fair value
less costs to sell. Subsequent gains
in fair value less costs to sell are
recognised to the extent they do not
exceed the cumulative impairment
losses previously recorded. A non-
current asset is not depreciated
26
Dar Al-Maal Al-Islami Trust
Annual Report 2011