Significant
renovations are capitalised if they extend
the life of the asset or increase its value.
Maintenance, repairs and minor renewals are
charged to income as incurred.
Property,
plant & equipment that are disposed of are
eliminated from the balance sheet, along with
the corresponding accumulated depreciation.
Any gain or loss resulting from such disposal
is included in current income.
The basis of valuation used on the transfer
of assets from SLT to SLTL is explained under
the heading “Assets acquired on incorporation”.
Depreciation
is calculated on a straight line method to
write off the cost of each asset to their
residual values over their estimated useful
lives as follows:
Freehold
buildings 50 years
Ducts
and other outside plant 10 to 25 years
Undersea cables (included under ducts, cables
and other outside plant) 8 to 10 years
Telephone exchanges and transmission equipment
12.5
years
Motor
vehicles 5 years
Other fixed assets 5 to 10 years
Freehold
land is not depreciated, as it is deemed to
have an infinite life
Where the carrying amount of an asset is greater
than its estimated recoverable amount, it
is written down immediately to its recoverable
amount.
The
property, plant & equipment records maintained
by SLTL are insufficient to allow an accurate
assessment of the appropriate depreciation
charge of individual assets, as much of the
accounting information is aggregated and incapable
of being allocated to individual assets, nor
do these records enable a detailed assessment
to be made for provision for permanent diminution
in value, if any. Accordingly the accumulated
depreciation and the depreciation charge for
the year have been based on broad estimates,
using the best information available.
Gains
and losses on disposal of property, plant
& equipment are determined by reference to
their carrying amount and are taken into account
in determining operating profit.
Interest
costs on borrowings to finance the construction
of property, plant & equipment are capitalised,
during the period of time that is required
to complete and prepare the property for its
intended use, as part of the cost of the asset.
|