Page 150 - KPJ_2011

2. Summary of significant accounting policies (continued)
2.18 Financial liabilities (continued)
(b) Other financial liabilities
The Group’s and the Company’s other mnancial liabilities include trade payables, other payables and
loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Borrowings are classimed
as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date.
For other mnancial liabilities, gains and losses are recognised in promt or loss when the liabilities are
derecognised, and through the amortisation process.
A mnancial liability is derecognised when the obligation under the liability is extinguished. When an
existing mnancial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modimed, such an exchange or modimcation is treated
as a derecognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in promt or loss.
2.19 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when
the activities to prepare the asset for its intended use or sale are in progress and the expenditures and
borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for
their intended use or sale.
All other borrowing costs are recognised in promt or loss in the period they are incurred. Borrowing costs
consist of interest and other costs that the Group and the Company incurred in connection with the borrowing
of funds.
2.20 Leases
(a) As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership
of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if
lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the
amount capitalised. Lease payments are apportioned between the mnance charges and reduction of the
lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged to promt or loss. Contingent rents, if any, are charged as expenses in the periods in
which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over
the shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in promt or loss on a straight-line basis over the
lease term. The aggregate benemt of incentives provided by the lessor is recognised as a reduction of
rental expense over the lease term on a straight-line basis.
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2011 (continued)
145 ANNUAL REPORT 2011