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Notes to the Consolidated Financial Statements
25
Dar Al-Maal Al-Islami Trust
Annual Report 2014
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 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
while classified as held for sale or
while part of a disposal group held
for sale.
The Group separately classifies the
material non-current assets held
for sale (or disposal group) in the
consolidated statement of financial
position. Furthermore, all major
classes of assets and liabilities
are disclosed. Any cumulative
income or expense is disclosed as
a separate item within equity. Prior
period amounts are not re-presented
to reflect the classification of the
assets (or disposal group) in the
current period.
Non-current assets, which are to be
abandoned, are not classified as
held for sale and are reclassified
as discontinued operations, to the
extent they meet the requirements
of discontinued operations in the
paragraph which follows.