NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
62
THE STRAITS TRADING COMPANY LIMITED
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. Such 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 accounting policy for borrowing costs is set out in note
2.22. 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.
Subsequent to recognition, property, plant and equipment other than land and buildings are measured at cost less
accumulated depreciation and any accumulated impairment losses. 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.
Land and buildings are measured at fair value less accumulated depreciation and impairment losses recognised after the
date of the revaluation. Valuations are performed with sufficient regularity to ensure that the carrying amount does not
differ materially from the fair value of the land and buildings at the end of the reporting period.
Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation
reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss,
in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the
extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and
the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation
reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.
An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on de-recognition of the asset is included in the profit or loss in the year
the asset is de-recognised.
