LensCrafters 2012 Annual Report Download - page 193

| 107 >CONSOLIDATED FINANCIAL STATEMENTS - NOTES
costs are charged to the consolidated statement of income during the financial period in
which they are incurred.
Borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying item of property, plant and equipment are capitalized as part of the cost of
that asset.
Upon disposal or when no future economic benefits are expected from the use of an item
of property, plant and equipment, its carrying amount is derecognized. The gain or loss
arising from derecognition is included in profit and loss.
Assets held for sale
Assets held for sale include non-current assets (or disposal groups) whose carrying amount
will be primarily recovered through a sale transaction rather than through continuing use
and whose sale is highly probable in the short-term. Assets held for sale are measured at
the lower of their carrying amount and their fair value, less costs to sell.
Finance and operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. Payments made under operating leases (net
of any incentives received from the lessor) are charged to the consolidated statement of
income on a straight-line basis over the lease term.
Leases where lessees bear substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalized at the lease’s commencement at the
lower of the fair value of the leased property and the present value of the minimum lease
payments.
Each finance lease payment is allocated between the liability and finance charges. The
corresponding rental obligations, net of finance charges, are included in “long-term debt”
in the statement of financial position. The interest element of the finance cost is charged
to the consolidated statement of income over the lease period. The assets acquired under
finance leases are depreciated over the shorter of the useful life of the asset and the lease
term.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the
Group’s share of the net identifiable assets of the acquired subsidiary at the date of
acquisition. Goodwill is tested at least annually for impairment and carried at cost
less accumulated impairment losses. Impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.