Annual Report 2016
79
2. Significant accounting policies (Cont’d)
(e) Leased assets (Cont’d)
(ii) Operating lease
Leases, where the Group does not assume substantially all the risks and rewards of ownership are classified
as operating leases and, except for property interest held under operating lease, the leased assets are not
recognised on the statement of financial position.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease
expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in
which they are incurred.
In respect of a subsidiary in Indonesia, prepaid lease payments include land use rights which represent location
permit, plantation license and cultivation rights title over the plantation land. The land use rights are amortised
using straight-line method over the legal terms of the related land use rights.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
(f) Intangible assets
(i) Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In
respect of equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of
the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill,
that forms part of the carrying amount of the equity-accounted associates.
(ii) Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in profit or loss as incurred.
Expenditure on development activities, whereby the application of research findings are applied to a plan or
design for the production of new or substantially improved products and processes, is capitalised only if
development costs can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Group intends to and has sufficient resources to complete
development and to use or sell the asset.
The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly
attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised
in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in
profit or loss as incurred.
Capitalised development expenditure is measured at cost less any accumulated amortisation and any
accumulated impairment losses.
(iii) Other intangible assets
Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are
measured at cost less any accumulated amortisation and any accumulated impairment losses.
Notes to the Financial Statements
(Cont’d.)
