Kia 2015 Annual Report Download - page 76

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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.
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:
Useful lives (years)
Buildings and structures 20 ~ 40
Machinery and equipment 3 ~ 15
Dies, molds and tools 5
Vehicles 5
Other equipment 3 ~ 5
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.
( l ) 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.
(m) 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:
Estimated useful lives (years)
Industrial property rights 5, 10
Software 2~5
Development costs (*)
Country club membership and golf club membership Indefinite
Other 25
(*) Capitalized development costs are amortized over the useful life considering the life cycle of the developed products.
70 | KIA MOTORS
December 31, 2015 and 2014
KIA MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS