Huawei 2015 Annual Report Download - page 61

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Construction in progress is transferred to other
property, plant and equipment when it is ready
for its intended use.
Gains or losses arising from the retirement
or disposal of an item of property, plant and
equipment are determined as the difference
between the net disposal proceeds and the
carrying amount of the item and are recognised
in profit or loss on the date of retirement or
disposal.
(ii) Depreciation
Depreciation is calculated to write off the cost
of items of property, plant and equipment, less
their estimated residual value, if any, using the
straight line method over their estimated useful
lives as follows:
■Freehold land and construction in progress
are not depreciated
■Buildings 30 years
■Machinery, electronic
equipment and other
equipment
3 to 10 years
■Motor vehicles 5 years
■Decoration and leasehold
improvements
2 to 5 years
Where components of an item of property, plant
and equipment have different useful lives, the
cost or valuation of the item is allocated on a
reasonable basis between the parts and each
part is depreciated separately. Both the useful life
of an item of property, plant and equipment and
its residual value, if any, are reviewed annually.
(h) Long-term leasehold prepayments
Long-term leasehold prepayments represent land
premium paid, resettlement fees and related
expenses incurred in obtaining the relevant land
use rights, less accumulated amortisation and
impairment losses (see note 3(k)).
Amortisation is charged to profit or loss on a
straight-line basis over the period of the rights
generally no more than 50 years.
(i) Goodwill and intangible assets
(i) Goodwill
Goodwill represents the excess of the fair value
of consideration paid to acquire a subsidiary over
the acquisition date fair value of the acquiree's
identifiable assets acquired less liabilities,
including contingent liabilities, assumed as at the
acquisition date, less impairment (see note 3(k)).
Where the fair value of the assets acquired less
liabilities assumed exceeds the consideration
paid, the excess is recognised immediately in
profit or loss as a gain.
Goodwill is not amortised but subject to
impairment testing (see note 3(k)) annually.
(ii) Other intangible assets
Other intangible assets that are acquired by
the Group are stated at cost less accumulated
amortisation and impairment losses (see note
3(k)).
(iii) Amortisation
Amortisation of other intangible assets with
finite useful lives is charged to profit or loss on
a straight-line basis over the assets' estimated
useful lives. The following intangible assets with
finite useful lives are amortised from the date
they are available for use and their estimated
useful lives are as follows:
■Software 3 years
■Patents 3 to 22 years
■Trademark and others 1 to 14 years
Both the period and method of amortisation are
reviewed annually and revised when necessary.
(iv) Research and development
Research and development costs comprise
all costs that are directly attributable to
research and development activities or that
can be allocated on a reasonable basis to such
activities. The nature of the Group's research and
development activities is such that the criteria
for the recognition of such costs as assets are