Creative 2010 Annual Report Download - page 28

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28
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
(ii) Financial assets, available-for-sale
A signicant or prolonged decline in the fair value of an equity security below its cost is considered as an indicator
that the available-for-sale nancial asset is impaired.
If any evidence of impairment exists, the cumulative loss that was recognised in the fair value reserve is reclassied
to prot or loss. 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 as an expense.
The impairment losses recognised as an expense on equity securities are not reversed through prot or loss.
2.7 Inventories
Inventories are carried at the lower of cost and 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 nished 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 prot or loss.
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 - 1 to 6 years
Furniture, xtures and ofce 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 prot or loss 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 benets associated with the item will ow to the Group and the
cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in prot or loss when
incurred.
notes to tHe fInAncIAl stAteMents
– For the nancial year ended 30 June 2010
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.6 Financial assets (cont’d)