NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Other property, plant and equipment
Other property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see note 1(j)).
The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or
loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:
Land
Buildings
Leasehold land classified as held under finance leases
Ferry vessels and other crafts
Machinery, furniture and other fixed assets
- Dry dock and ship lift
- Others
Over the unexpired terms of the leases
40 years or over the unexpired
terms of the leases, if shorter Over the unexpired terms of the leases 8 to 15 years
30 to 40 years
4 to 10 years
Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on
a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.
(i)
Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
Hong Kong Ferry (Holdings) Company Limited Annual Report 2014
51