Kia 2013 Annual Report Download - page 41

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of property, plant and equipment and are recognized in profit or loss.
The estimated useful lives of the Company’s property, plant and equipment are as follows:
(i) Impairment of financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is
objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after
the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can
be estimated reliably. However, losses expected as a result of future events, regardless of likelihood, are not recognized. In addition, for
an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
If financial assets have objective evidence that they are impaired, impairment losses should be measured and recognized.
FINANCIAL ASSETS MEASURED AT AMORTIZED COST An impairment loss in respect of a financial asset measured at amortized
cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flows discounted
at the asset’s original effective interest rate. If it is not practicable to obtain the instrument’s estimated future cash flows, impairment
losses would be measured by using prices from any observable current market transactions. The Company can recognize impairment
losses directly or establish a provision to cover impairment losses. If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an
improvement in the debtor’s credit rating), the previously recognized impairment loss shall be reversed either directly or by adjusting
an allowance account.
FINANCIAL ASSETS CARRIED AT COST If there is objective evidence that an impairment loss has occurred on an unquoted equity
instrument that is not carried at fair value, the amount of the impairment loss is measured as the difference between the carrying
amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a
similar financial asset. Such impairment losses shall not be reversed.
AVAILABLE-FOR-SALE FINANCIAL ASSETS When a decline in the fair value of an available-for-sale financial asset has been
recognized in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been
recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment even though the
financial asset has not been derecognized. Impairment losses recognized in profit or loss for an investment in an equity instrument
classified as available-for-sale is not be reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument
classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was
recognized in profit or loss, the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.
(j) Property, plant and equipment
Property, plant and equipment are initially measured at cost. The cost of property, plant and equipment includes expenditures arising
directly from the construction or acquisition of the asset, any costs 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 and the initial estimate of the costs of
dismantling and removing the item and restoring the site on which it is located.
Subsequent to initial recognition, an item of property, plant and equipment is carried at its cost less any accumulated depreciation and
any accumulated impairment losses.
Subsequent costs are recognized in the carrying amount of property, plant and equipment at cost or, if appropriate, as separate
items if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. The costs of the day-to-day servicing are recognized in profit or loss as incurred.
Property, plant and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately
reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A component that is significant
compared to the total cost of property, plant and equipment is depreciated over its separate useful life.
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For the years ended December 31, 2013 and 2012
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The
change is accounted for as a change in an accounting estimate.
(k) Borrowing costs
The Company capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part
of the cost of that asset. Other borrowing costs are recognized in expense as incurred. A qualifying asset is an asset that requires a
substantial period of time to get ready for its intended use or sale. Financial assets and inventories that are manufactured or otherwise
produced over a short period of time are not qualifying assets. Assets that are ready for their intended use or sale when acquired are
not qualifying assets.
(l) Intangible assets
Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated
impairment losses.
Amortization of intangible assets except for goodwill is calculated on a straight-line basis over the estimated useful lives of intangible
assets from the date that they are available for intended use. The residual value of intangible assets is zero. However, as useful lives of
intangible assets are not foreseeable to the periods over which memberships are expected to be available for use, this intangible asset
is determined as having indefinite useful lives and not amortized.
The estimated useful lives of the Company’s intangible assets for the current and comparative periods are as follows:
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Buildings and structures 20 – 40
Machinery and equipment 3 – 15
Dies, molds and tools 5
Vehicles 5
Other equipment 5
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Industrial property rights 5, 10
Software 5
Development costs (*)
Country club membership and golf club membership Indefinite
(*) Capitalized development costs are amortized over the useful life considering the life cycle of the developed products.
Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting
period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine
whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes are accounted for
as changes in accounting estimates.
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