Creative 2012 Annual Report Download - page 30

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28
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
2.9 Property and equipment
(a) Measurement
Property and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and
accumulated impairment losses.
Cost recognised includes purchase price and any cost that is 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.
(b) Depreciation
No depreciation is provided on freehold land. Depreciation is calculated using the straight line method to allocate their
depreciable amounts over the estimated useful lives as follows:
Leasehold land and buildings - 20 to 30 years
Machinery and equipment - 1 to 6 years
Furniture, xtures and ofce equipment - 1 to 8 years
Leasehold improvements - Shorter of lease term or useful life
The residual values, estimated useful lives and depreciation methods are reviewed and adjusted as appropriate, at each
balance sheet date. The effects of any revision are recognised in prot or loss when the changes arise.
(c) Subsequent measurement
Subsequent expenditure relating to property and equipment that has already been recognised is added to the carrying amount
of the asset only when it is probable that future economic benets associated with the item will ow to the Group and the
cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in prot or loss when
incurred.
(d) Disposal
On disposal of an item of property and equipment, the difference between the disposal proceeds and its carrying amount is
recognised in prot or loss when incurred.
2.10 Trade and other payables
Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective
interest method.
2.11 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
more likely than not that an outow of resources will be required to settle the obligation and the amount has been reliably
estimated. Changes in the estimated timing or amount of the expenditure or discount rate are recognised in prot or loss
when the changes arise.
(a) Warranties
The warranty provision represents management’s best estimate of probable liability under its product warranties. Management
determines the warranty provision based on known product failures (if any), historical experience, and other currently
available evidence.
NOTES TO THE FINANCIAL STATEMENTS
For the nancial year ended 30 June 2012
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)