Creative 2009 Annual Report Download - page 25

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25
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES
The cumulative loss that was recognised in the fair value reserve is transferred to the income statement. The cumulative
loss is measured as the difference between the acquisition cost (net of any principal repayments and amortisation)
and the current fair value, less any impairment loss previously recognised in the income statement on debt securities.
The impairment losses recognised in the income statement on equity securities are not reversed through the income
statement.
2.7 Inventories
Inventory is carried at the lower of cost or net realisable value. Cost is determined using standard cost, appropriately
adjusted at the balance sheet date to approximate actual cost on a weighted average basis. In the case of finished products
and work-in-progress, cost includes materials, direct labour and an appropriate proportion of production overheads. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
2.8 Investments in subsidiaries and associated companies
Investments in subsidiaries and associated companies are carried at cost less accumulated impairment losses in the Company’s
balance sheet. On disposal of investments in subsidiaries and associated companies, the difference between disposal proceeds
and the carrying amounts of the investments are recognised in the income statement.
2.9 Property and equipment
(a) Measurement
Property and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and
accumulated impairment losses.
Cost recognised includes purchase price and any cost that is directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management.
(b) Depreciation
No depreciation is provided on freehold land. Depreciation is calculated using the straight-line method to allocate their
depreciable amounts over the estimated useful lives as follows:
Leasehold land and buildings - 20 to 50 years
Machinery and equipment - 3 to 6 years
Furniture, fixtures and office equipment - 1 to 8 years
Leasehold improvements - Shorter of lease term or useful life
The residual values, estimated useful lives and depreciation methods are reviewed and adjusted as appropriate, at each
balance sheet date. The effects of any revision are recognised in the income statement when the changes arise.
(c) Subsequent measurement
Subsequent expenditure relating to property and equipment that has already been recognised is added to the carrying amount
of the asset only when 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. All other repair and maintenance expenses are recognised in the income statement
when incurred.
(d) Disposal
On disposal of an item of property and equipment, the difference between the disposal proceeds and its carrying amount is
recognised in the income statement.
AR09 pg1-64_Final.indd 25 10/2/2009 10:38:07 AM