/ . 6 6
E U R O S P O R T S G L O B A L L I M I T E D
Notes to
the F iNaNci al statemeNts
3 1 ma r ch 2 0 1 5
2 .
Summa r y o f S i gn i f i c an t ac coun t i ng Po l i c i e s ( Con t ’ d )
Property, Plant and Equipment
Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual
values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are
as follows:
Plant and Equipment
–
10% to 33%
Motor vehicles
–
20%
Renovations
–
20%
Leasehold property and improvements
–
8% to 16% (over remaining lease term)
Construction in progress
–
Not depreciated
An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully
depreciated assets still in use are retained in the financial statements.
Property, plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any
accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of
an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any,
and the carrying amount of the item and is recognised in profit or loss. The residual value and the useful life of an asset
is reviewed at least at the end of the reporting year and, if expectations differ significantly from previous estimates, the
changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and
future periods are adjusted.
Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset
or component to the location and condition necessary for it to be capable of operating in the manner intended by
management. Subsequent costs are recognised as an asset only when it is probable that future economic benefits
associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss when they are incurred.
Leases
Whether an arrangement is, or contains, a lease, it is based on the substance of the arrangement at the inception
date, that is, whether (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset);
and (b) the arrangement conveys a right to use the asset. Leases are classified as finance leases if substantially all
the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. At
the commencement of the lease term, a finance lease is recognised as an asset and as a liability in the statement of
financial position at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum
lease payments, each measured at the inception of the lease. The discount rate used in calculating the present value
of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the lessee’s
incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised as an asset.
The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated
to each reporting year during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability. Contingent rents are charged as expenses in the reporting years in which they are incurred. The
assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as operating leases.
