Huawei 2012 Annual Report Download - page 47

Consolidated Financial Statements Summary and Notes 44
Depreciation is calculated to write off
the cost of buildings, less their estimated
residual value (5%), using the straight line
method over their estimated useful life of
20 years.
(h) Other property, plant and equipment
i) Recognition and measurement
Items of property, plant and equipment are
measured in the consolidated balance sheet
at cost less accumulated depreciation (see
below) and accumulated impairment losses
(see note 1(k)). Cost includes expenditure that
is directly attributable to the acquisition of
the assets. The cost of self-constructed items
of property, plant and equipment includes
the cost of materials, direct labour, the initial
estimate, where relevant, of the costs of
dismantling and removing the items and
restoring the site on which they are located,
and an appropriate proportion of production
overheads and borrowing costs (see note
1(v)).
Where parts of an item of property, plant
and equipment have different useful lives,
the cost is allocated on a reasonable
basis between the parts and each part is
depreciated separately.
Gains or losses arising from the retirement
or disposal of an item of property, plant and
equipment, are determined as the difference
between the net disposal proceeds and
the carrying amount of the item and are
recognised in profit or loss on the date of
retirement or disposal.
Construction in progress is transferred to
other property, plant and equipment when it
is ready for its intended use. No depreciation
is provided against construction in progress.
ii) Subsequent costs
The cost of replacing part of an item of
property, plant and equipment is recognised
in the carrying amount of the item if it is
probable that the future economic benefits
embodied within the part will flow to
the Group and its cost can be measured
reliably. The carrying amount of the replaced
component is derecognised. The costs of
the day-to-day servicing of property, plant
and equipment are recognised in profit or
loss as incurred.
iii) Depreciation
Depreciation is calculated to write off the cost
of items of property, plant and equipment,
less their estimated residual value, if any, using
the straight line method over their estimated
useful lives as follows:
Estimated
useful
lives
Estimated
rate of
residual
value
Freehold land is not
depreciated
Buildings 20 years 5%
Machinery, electronic
equipment and other
equipment
3 – 10 years 5%
Motor vehicles 5 years 5%
Decoration and leasehold
improvements 2 – 5 years Nil
Where parts of an item of property, plant
and equipment have different useful lives,
the cost or valuation of the item is allocated
on a reasonable basis between the parts and
each part is depreciated separately. Both the
useful life of an item of property, plant and
equipment and its residual value, if any, are
reviewed annually.