122 | CapitaLand Limited Annual Report 2014
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)
2.4 Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Certain
of the Group’s property, plant and equipment acquired through interests in subsidiaries, are accounted for
as acquisition of assets.
Subsequent expenditure relating to property, plant and equipment that has already been recognised is added
to the carrying amount of the asset if it is probable that future economic benemts, in excess of the originally
assessed standard of performance of the existing asset, will now to the Group and its cost can be measured
reliably. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.
Depreciation is recognised from the date that the property, plant and equipment are installed and are ready for
use. Depreciation on property, plant and equipment is recognised in the promt or loss on a straight-line basis
over the estimated useful lives of each component of an item of property, plant and equipment as follows
Leasehold land and buildings (excluding
Lease period ranging from
serviced residence properties)
30 years to 50 years
Plant, machinery and improvements,
furniture, mttings and equipment
3 to 10 years
Motor vehicles
5 years
Furniture, mttings and equipment
2 to 5 years
For serviced residence properties where the residual value at the end of the intended holding period is lower
than the carrying amount, the difference in value is depreciated over the Group’s intended holding period.
The intended holding period (the period from the date of commencement of serviced residence operations to
the date of expected strategic divestment of the properties) ranges from three to mve years. No depreciation
is recognised where the residual value is higher than the carrying amount.
Assets under construction are stated at cost and are not depreciated. Expenditure relating to assets under
construction (including borrowing costs) are capitalised when incurred. Depreciation will commence when
the development is completed.
The assets’ residual values, useful lives and depreciation methods are reviewed at each reporting date, and
adjusted if appropriate.
2.5 Intangible assets
(a) Goodwill
Acquisition on or after 1 January 2010
For business combinations on or after 1 January 2010, the Group measures goodwill as at acquisition
date based on the fair value of the consideration transferred (including the fair value of any pre-existing
equity interest in the acquiree) and the recognised amount of any non-controlling interests in the acquiree,
less the net recognised amount (generally fair value) of the identimable assets acquired and liabilities assumed.
When the amount is negative, a gain on bargain purchase is recognised in the promt or loss. Goodwill is
subsequently measured at cost less accumulated impairment losses.
Goodwill arising from the acquisition of subsidiaries is included in intangible assets. Goodwill arising from
the acquisition of associates and joint ventures is presented together with interests in associates and joint
ventures.
