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Notes to the
financial statements
For the financial year ended 31 December 2018
84
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)
2.10
Intangible assets (cont’d)
Vessel design
Vessel design is treated as intangible asset and initially capitalised at cost. Vessel design is
subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
These costs are amortised to profit or loss using the straight-line method over the useful life of
10 years.
2.11
Lease prepayment
Leases of land under which the lessor has not transferred all the risks and rewards incidental to
ownership are classified as operating leases and the payments made on acquiring the land–use
right represent prepaid lease payments.
Lease prepayments for land–use right are initially measured at cost. Following initial recognition,
they are amortised on a straight–line basis over the term of the respective lease.
2.12
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists, or when an annual impairment testing for an asset is required, the
Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less
costs of disposal and its value in use and is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from other assets or groups
of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses of continuing operations are recognised in profit or loss, except for assets that
are previously revalued where the revaluation was taken to other comprehensive income. In this
case, the impairment is also recognised in other comprehensive income up to the amount of any
previous revaluation.
A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. That
increase cannot exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised previously. Such reversal is recognised in profit or loss
unless the asset is measured at revalued amount, in which case the reversal is treated as a
revaluation increase. Impairment losses relating to goodwill cannot be reversed in future periods.