AGRIBEL HOLDINGS LTD FINANCIAL REVIEW 2021
Transfers are made to /( from ) investment property only when there is a change in use . If owner-occupied property becomes an investment property , the Company accounts for it in accordance with property , plant and equipment up to the date of change .
Under certain circumstances , it is difficult to distinguish between investment property and property occupied by the owner . In such circumstances , the criteria are to distinguish based on the existing occupation and purpose of the property .
2.6 Leases The Group assesses at contract inception whether a contract is , or contains , a lease . That is , if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration .
Group The Group applies a single recognition and measurement approach for all leases , except for short-term leases and leases of low-value assets . The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets .
i ) Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease ( i . e . the date the underlying asset is available for use ). Right-of-use assets are measured at cost , less any accumulated depreciation and impairment losses , and adjusted for any remeasurement of lease liabilities . The cost of right-of-use assets includes the amount of lease liabilities recognised , initial direct costs incurred , and lease payments made at or before the commencement date less any lease incentives received . Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets , as follows :
Buildings and improvements Plant and machinery
3 to 15 years 3 to 15 years
If ownership of the leased asset transfers to the group at the end of the lease term or the cost reflects the exercise of a purchase option , depreciation is calculated using the estimated useful life of the asset .
The right-of-use assets are also subject to impairment . Refer to accounting policy note 3.8 for the impairment of nonfinancial assets .
ii ) Lease liabilities At the commencement date of the lease , the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term . The lease payments include fixed payments ( including in substance fixed payments ) less any lease incentives receivable , variable lease payments that depend on an index or a rate , and amounts expected to be paid under residual value guarantees . The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease , if the lease term reflects the Group exercising the option to terminate . Variable lease payments that do not depend on an index or a rate are recognised as expenses ( unless they are incurred to produce inventories ) in the period in which the event or condition that triggers the payment occurs .
In calculating the present value of lease payments , the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable . After the commencement date , the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made . In addition , the carrying amount of lease liabilities is remeasured if there is a modification , a change in the lease term , a change in the lease payments ( e . g ., changes to future payments resulting from a change in an index or rate used to determine such lease payments ) or a change in the assessment of an option to purchase the underlying asset .
74 AGRIBEL ANNUAL FINANCIAL REVIEW 2021 Agribel Holdings Limited Reg nr : 1996 / 017629 / 06