3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.3 Property, plant and equipment
(continued)
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the
item if it is probable that future economic benefits embodied within the component 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 income statement as incurred.
Depreciation
Depreciation is recognised in income statement on a straight-line basis so as to write off items of property, plant and equipment,
and major components that are accounted for separately, over their estimated useful lives, as follows:
Leasehold improvements
– 2 to 10 years
Plant and equipment
– 2 to 5 years
Office furniture, fittings and equipment
– 2 to 10 years
Computers
– 2 to 5 years
Motor vehicles
– 5 years
Depreciation methods, useful lives and residual values are reviewed and adjusted as appropriate, at each reporting date.
3.4 Intangible assets
Retail business infrastructure
Retail business infrastructure acquired in a business combination represents the partnership agreement with a major customer.
The retail business infrastructure is amortised in the income statement on a straight-line basis over 3 years, from the date
of the agreement.
Order backlogs
Order backlogs acquired in a business combination represent the contracts and confirmed purchase orders yet to be fulfilled.
Order backlogs are amortised to the income statement over the contractual time taken to fulfil the customer orders.
Customer relationships
Customer relationships acquired in a business combination represent the network of customers where the acquired business
has established relationships with the customers particularly in the financial services industry. Amortisation for customer
relationship is recognised in the income statement on a straight-line basis over 5 to 7 years, commencing from the date of
acquisition.
67
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
