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Notes to the financial statements
31 December 2012
(continued)
Annual Report 2012 KPJ Healthcare Berhad
2. Summary of significant accounting policies (continued)
2.7 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if,
and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation and accumulated
impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts
as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in
the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred. Freehold land, long leasehold land and buildings are measured at fair value less accumulated depreciation on
long leasehold land and buildings and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient regularity
to ensure that the carrying amount does not differ materially from the fair value of the freehold land, long leasehold land and buildings at the reporting
date.
Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the
extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit
or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset
revaluation reserve.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated
to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to
retained earnings on retirement or disposal of the asset.
Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets as follows:
Buildings
2%
Renovation
10%
Medical and other equipment
7.5% - 25%
Furniture and fittings
10% - 20%
Motor vehicles
20%
Computers
20% - 33%
Capital work-in-progress included in plant and equipment are not depreciated as these assets are not yet available for use.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying
value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any
gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.
2.8 Investment properties
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at
fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference to market evidence of transaction prices for similar
properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in
the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are included
in profit or loss in the year in which they arise.