Annual Report 2015
85
2 SIGNIFICANT ACCOUNTING POLICIES
(continued)
2.6 Summary of significant accounting policies
(continued)
g) Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation. Leasehold buildings and leased equipment are
depreciated over the period of the lease.
Subsequent costs are included in the asset’s carrying amount or are recognised 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. All other repairs and maintenance are charged to the consolidated statement of income during
the financial period in which they are incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position
date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in
the consolidated statement of income.
Depreciation other than on leasehold buildings and leased equipment is computed on the declining balance method at rates
expected to apportion the cost of the assets over their estimated useful lives.
The depreciation rates used are as follows:
Freehold and leasehold premises
2%
Equipment, furniture and fittings
15% - 33.33%
h) Impairment of non-financial assets
Further disclosures relating to impairment of non-financial assets are also provided in the following notes:
• Disclosures for significant assumptions (Note 3)
• Premises and equipment (Note 7)
• Goodwill (Note 8)
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its
value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows available to shareholders are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other available fair value indicators.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the
asset’s or CGU’s recoverable amount.
