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Notes to the
financial statements
For the financial year ended 31 December 2018
82
B A K E R T E C H N O L O G Y
L I M I T E D
2.
Summary of significant accounting policies (cont’d)
2.9
Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition,
property, plant and equipment other than freehold land and building are measured at cost less
accumulated depreciation and any accumulated impairment losses.
The cost includes the cost of replacing part of the property, plant and equipment and borrowing
costs that are directly attributable to the acquisition, construction or production of a qualifying
property, plant and equipment. The cost of an item of property, plant and equipment is recognised
as an asset if, and only if, it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably.
When significant parts of property, plant and equipment are required to be replaced in intervals,
the Group recognises such parts as individual assets with specific useful lives and depreciation,
respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in profit or loss as incurred.
Depreciation of an asset begins when it is available for use and is computed on a straight-line basis
over the estimated useful life of the asset as follows:
Leasehold land and buildings –
over remaining terms of lease
Leasehold improvements
–
5 to 7 years
Furniture and fittings
–
5 years
Office equipment
–
3 to 5 years
Motor vehicles
–
4 to 5 years
Plant and equipment
–
3 to 10 years
Vessels
–
10 to 25 years
Drydocking expenditure
–
5 years
Assets under construction are not depreciated as these assets are not yet available for use.
Fully depreciated assets still in use are retained in the financial statements until they are no longer
in use and no further charge for depreciation is made in respect of these assets.
The carrying value of property, plant and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end and
adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
is included in the profit or loss in the year the asset is derecognised.