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LIPPO MALLS INDONESIA RETAIL TRUST ANNUAL REPORT 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Borrowing costs
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. The interest expense
is calculated using the effective interest rate method. Borrowing costs are recognised as an expense in the period
in which they are incurred except that borrowing costs that are directly attributable to the acquisition, construction
or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended
use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete.
Unit based payments
The cost is recognised as an expense when the units are issued for services. The issued capital is increased by the fair
value of the transaction. Incidental costs directly attributable to the issuance of units are deducted against unitholders’
funds.
Plant and equipment
Depreciation is provided on a straight-line basis to allocate the gross carrying amounts 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 – 25%
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.
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
plant and equipment is measured 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 each 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.
Investment property
Investment property is property (land or a building or part of a building or both) owned or held under a finance lease to
earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or
for administrative purposes or sale in the ordinary course of business. It includes an investment property in the course
of construction. After initial recognition at cost including transaction costs the fair value model is used to measure the
investment property at fair value as of the end of the reporting year. A gain or loss arising from a change in the fair
value of investment property is included in profit or loss for the reporting year in which it arises. The fair values are
measured periodically on a systematic basis at least once yearly by external independent valuers having an appropriate
recognised professional qualification and recent experience in the location and category of property being valued.
Notes to the Financial Statements
(Cont’d)
31 December 2014
