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Notes to the Consolidated Financial Statements

31st March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.6 Property, plant and equipment (continued)

Leasehold land classified as finance lease commences amortisation from the time when the land
interest becomes available for its intended use. Amortisation on leasehold land classified as finance
lease and depreciation on other assets is calculated using the straight-line method to allocate their
cost to their residual values over the shorter of the unexpired lease term or their estimated useful
lives.

Depreciation on leasehold improvements, buildings and moulds is calculated using the straight-
line method to allocate their costs over their estimated useful lives of 15 years, 40 years and 4
years respectively. Other property, plant and equipment are depreciated at rates sufficient to write
off their cost less accumulated impairment losses over their estimated useful lives on a reducing
balance basis. The principal depreciation rates are as follows:

Furniture, fixtures and equipment 20%
Plant and machinery 14.5% to 20%
Motor vehicles 20%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (Note 2.9).

Gains and losses on disposals are determined by comparing the proceeds with the carrying
amount and are recognised within “other operating expenses” in the consolidated income
statement.

2.7 Investment properties

Investment property, principally comprising leasehold land and buildings, is held for long-
term rental yields or for capital appreciation or both, and that is not occupied by the Group. It
also includes properties that are being constructed or developed for future use as investment
properties. Land held under operating leases are accounted for as investment properties when
the rest of the definition of an investment property is met. In such cases, the operating leases
concerned are accounted for as if they were finance leases. Investment property is initially
measured at cost, including related transaction costs and where applicable borrowing costs.
After initial recognition, investment properties are carried at fair value, representing open market
value determined at each reporting date by external valuers. The market value of the properties is
calculated on the discounted net rental income allowing for reversionary potential. Changes in fair
values are recorded in the consolidated income statement as part of “other income”.

42 ALCO HOLDINGS LIMITED ANNUAL REPORT 2015