Notes to the Consolidated Financial Statements
25
Dar Al-Maal Al-Islami Trust
Annual Report 2013
amortised using the straight line
method over their useful lives.
(c) Other acquired intangible assets
Other acquired intangible assets
determined to have finite lives, such
as core deposits and customer
relationships, are amortised on
a straight line basis over their
estimated useful lives. The original
carrying amount of core deposits
and customer relationships has
been determined by independent
appraisers, based on the interest
differential on the expected deposit
duration method.
Investment Property
Investment property principally
comprises office buildings which
are held to earn rental income or
for long-term capital appreciation
or both. Investment property is
treated as a long-term investment
and is carried at fair value,
representing open market value
determined annually by reference
either to external valuers or to other
independent valuation sources.
Changes in fair values are recorded
in the consolidated statement of
income and are included in other
income. The Group does not classify
operating leases as investment
property.
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
or useful life
Furniture, equipment and motor
vehicles: 3-10 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.
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
