FGV Audited Financial Statements 2020

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j) Property, plant and equipment (continued) Freehold land is not depreciated as it has an infinite life. Spare parts or servicing equipment recognised as property, plant and equipment would be depreciated over a period that does not exceed the useful life of the assets to which they relate. All property, plant and equipment are depreciated on a straight line basis to write off the cost of each asset to their residual values over their estimated useful lives as follows: Property, plant and equipment Estimated useful lives (years) Buildings, structures and renovations 3 to 60 Plant and machinery 3 to 30 Motor vehicles 3 to 30 Office equipment, tools and other equipment 2 to 33 Bearer plants - Oil palm 22, or the lease term if shorter - Rubber trees 20, or the lease term if shorter - Mango trees 25, or the lease term if shorter - Livestock 5 to 8 The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. The effects of any revision of the residual values and useful lives are included in profit or loss for the financial year in which the changes arise. Depreciation on property, plant and equipment ceases at the earlier of derecognition and classification as held for sale. Depreciation on assets under construction commences when the assets are ready for their intended use. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in “other operating income” in profit or loss. At each statement of financial position date, the Group assess whether there is any indication of impairment. If such an indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. See significant accounting policies Note 3(o) on impairment of non-financial assets. (k) Investment properties Investment properties are held for long-term rental yields or for capital appreciation or both, and are not occupied by the Group. Investment property is measured initially at its cost, including related transaction costs and borrowing costs if the investment property meets the definition of qualifying asset. After initial recognition, investment property is stated at cost less any accumulated depreciation and impairment losses. Freehold land is not depreciated as it has an infinite life. All investment properties are depreciated on a straight line basis to allocate the cost of each asset to their residual values over their estimated useful lives as follows: Investment properties Estimated useful lives (years) Leasehold land 50 to 99 Buildings 20 to 50 Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised. 39 Notes to the Financial Statements For The Financial Year Ended 31 December 2020 Audited Financial Statements 2020