Senwes Annual Financial Statements 2022 | Page 77

SENWES ANNUAL FINANCIAL STATEMENTS 2022

2.3 Property , plant and equipment Property , plant and equipment are held with a view to generate economic benefit from it for more than one period of use in the production or supply of goods or services or for administrative purposes and are not acquired for resale purposes .

All property , plant and equipment items are initially recognised at cost . Thereafter it is measured with reference to the cost of the asset less accumulated depreciation and accumulated impairments .

• The cost of property , plant and equipment includes the following : purchase price including import duties , non-refundable purchase taxes and costs directly attributable to bringing an asset to the location and condition necessary to operate as intended by management , less trade discounts and rebates .

• Property , plant and equipment with a cost of more than R7 000 are capitalised , while assets with a cost of less than R7 000 are written off against operating profit .

• Profits and losses on sale of property , plant and equipment are calculated on the basis of their carrying values and are accounted for in operating profit .

• With the replacement of a part of an item of property , plant and equipment , the replaced part is derecognised . The replacement part shall be recognised according to the recognition criteria as an individual asset with specific useful life and depreciation .

The carrying values of property , plant and equipment are considered for impairment when the events or changes in circumstances indicate that the carrying values are no longer recoverable from its future use or realisation of the assets .

Depreciation is calculated on a fixed percentage basis over the expected useful life at the following rates :

Depreciation begins when an asset is available for use , even if it is not yet brought into use . Each part of an item of property , plant and equipment with a cost which is significant in relation to the total cost of the item , is depreciated separately . Land is not depreciated as it is deemed to have an unlimited life .

The useful life method of depreciation and residual value of property , plant and equipment are reviewed at each reporting date and adjusted prospectively , if appropriate . The evaluations in respect of the useful life and residual value of assets can only be determined accurately when items of property , plant and equipment approach the end of their lives . Useful life and residual value evaluations can result in an increased or decreased depreciation expense . If the residual value of an asset equals its carrying amount , the asset ’ s depreciation charge is nil , unless and until its residual value subsequently decreases to an amount below the asset ’ s carrying amount .

2.4 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost . The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition . Following initial recognition , intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses . Internally generated intangibles , excluding capitalised development costs , are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred .

The useful lives of intangible assets are assessed as either finite or indefinite .

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired . The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period . Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method , as appropriate , and are treated as changes in accounting estimates . The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets .

An intangible asset is derecognised upon disposal ( i . e . at the date the recipient obtains control ) or when no future economic benefits are expected from its use or disposal . Any gain or loss arising upon derecognition of the asset ( calculated as the difference between the net disposal proceeds and the carrying amount of the asset ) is included in the statement of profit or loss .

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