Lenovo 2009 Annual Report Download - page 86
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2008/09 Annual Report Lenovo Group Limited
84
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 Significant accounting policies (continued)
(d) Property, plant and equipment (continued)
(ii) Other property, plant and equipment
Other property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses. Depreciation on other property, plant and equipment is calculated to write off their cost to their
estimated residual value on the straight-line basis over their expected useful lives to the Group. The principal annual
rates used for this purpose are:
Plant and machinery
Tooling equipment 50%
Other machinery 5-10%
Furniture and fixtures 20-33%
Office equipment 10-20%
Motor vehicles 20-33%
(iii) Carrying value of property, plant and equipment
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
During the year, the estimated useful life of tooling equipment was reviewed and changed to 2 years as it reflects
the current product life cycle. This change has resulted in an accelerated depreciation charge of approximately
US$37 million.
(iv) Gain or loss on disposal of property, plant and equipment
Gain or loss on disposal of a property, plant and equipment is the difference between the net sales proceeds and
the carrying amount of the relevant asset, and is recognized in the income statement.
(v) Subsequent costs
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
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. The carrying amount of the replaced part is derecognized. All other repairs
and maintenance are charged in the income statement during the financial period in which they are incurred.
(e) Construction-in-progress
Construction-in-progress is stated at cost. Cost comprises all direct and indirect costs of acquisition or construction
or installation of buildings, plant and machinery or internal use software as well as interest expenses and exchange
differences on the related funds borrowed during the construction, installation and testing periods and prior to the
date when the assets were put into use, less any accumulated impairment losses. No depreciation or amortization is
provided for on construction-in-progress. On completion, the buildings, plant and machinery or internal use software are
transferred to property, plant and equipment or intangible assets at cost less accumulated impairment losses.