NOTES TO THE FINANCIAL STATEMENTS
(CONT’D)
31 DECEMBER 2015
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION (CONT’D)
2A.
Significant accounting policies (cont’d)
Leases
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 statements 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 determined 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. For operating leases,
lease payments are recognised as an expense in the profit or loss on a straight-line basis over the term of the
relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if
the payments are not on that basis. Lease incentives received are recognised in profit or loss as an integral part of
the total lease expense. Rental income from operating leases is recognised in the profit or loss on a straight-line
basis over the term of the relevant lease unless another systematic basis is representative of the time pattern
of the user’s benefit, even if the payments are not on that basis. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-
line basis over the lease term. Contingent rents receivable are recognised in the periods in which they occur.
Intangible assets
Intangible assets which relate to the rental guaranteed payments from certain master lease agreements are
measured initially at cost, being the fair value as at the date of acquisition. Following the initial recognition, intangible
asset is measured at cost less any accumulated amortisation and any impairment losses. Intangible assets with
finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortisation period and amortisation method are
reviewed at each financial year-end.
The amortisable amount of an intangible asset with finite useful life is allocated on a systematic basis over the
best estimate of its useful life from the point at which the asset is ready for use.
The useful live is as follows:
Rental guaranteed payments – Over the guarantee periods, which range from 3 to 25 years
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset
is derecognised.
ANNUAL REPORT 2015
83
