D-Link 2014 Annual Report Download - page 37

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14
D-LINK CORPORATION AND SUBSIDIARIES
Notes to the consolidated financial statements
(Continued)
The gain or loss arising from the derecognition of an item of property, plant and equipment shall
be determined as the difference between the net disposal proceeds, if any, and the carrying
amount of the item, and it shall be recognized as other gains and losses.
(2) Reclassification to investment property
The property is reclassified to investment property at its carrying amount when there is a change
in use.
(3) Subsequent cost
Subsequent expenditure is capitalized only when it is probable that the future economic benefits
associated with the expenditure will flow to the Consolidated Company. The carrying amount of
those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as
incurred.
(4) Depreciation
The depreciable amount of an asset is determined after deducting its residual amount, and is
estimated using the straight-line method over its useful life and is assessed based on the
components that are significant. If the useful life of a component differs from that of others, the
depreciable amount should be disclosed individually. The depreciable amount is recognized in
profit and loss.
Land has an unlimited useful life, and therefore, is not depreciated.
The estimated useful lives for the current and comparative years of significant items of property,
plant and equipment are as follows:
(i) Buildings and improvements: 5~56 years
(ii) Transportation, office equipment and others: 2~9 years
Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If
expectations differ from the previous estimates, the change(s) is accounted for as a change in an
accounting estimate.
(m) Leases
(1) Lessor
Lease income from an operating lease is recognized in income on a straight-line basis over the
lease term.
(2) Lessee
Leases are classified as operating leases if it doesn't transfer substantially all the risks and
rewards incidental to ownership. Payments made under operating lease (excluding insurance
and maintenance expenses) are recognized in profit or loss on a straight-line basis over the lease
term.