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NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2013
77 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.7 Property, plant and equipment (cont’d)
From 1 January 2013, the Group has changed the estimated useful lives of certain classes of fixed assets as follows:
Useful lives
before change
Useful lives
after change
• Land use rights 8 to 40 years No change
• Buildings and improvements 5 to 25 years 10 to 20 years
• Plant and machinery 4 to 20 years No change
• Heavy equipment, transportation equipment and vessel 3 to 20 years 5 to 20 years
• Furniture, fixtures and office equipment 4 to 10 years No change
The Group believes that such changes will reflect a more accurate estimation of the useful lives of the property, plant and
equipment. The effect of this change in accounting estimate is recognised prospectively in the profit and loss in the period of the
change and future periods as follows:
Financial years ended 31 December:
Decrease in
depreciation
expense
Decrease in
income tax
expense
Increase in
profit for the
year
Rp million Rp million Rp million
2013 38,514 9,629 28,885
2014 39,330 9,832 29,498
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
The carrying amount of an item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising from the derecognition of the asset is included in the
consolidated statement of comprehensive income in the year the asset is derecognised.
The assets residual values, useful lives and depreciation method are reviewed at each year end and adjusted prospectively if
necessary.
The cost of construction-in-progress represents all costs incurred on the construction of the assets. The accumulated costs will
be reclassified to the appropriate property, plant and equipment account when the construction is completed. No depreciation
is provided on construction-in-progress.
Interest on borrowings to finance the construction of property, plant and equipment is capitalised during the period of time that
is required to complete and prepare each asset for its intended use.
Repair and maintenance costs are taken to the consolidated statement of comprehensive income during the period in which they
are incurred. The cost of major renovation and restoration is included in the carrying amount of the asset when it is probable that
future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group,
and is depreciated over the remaining useful life of the asset.
Assets under finance lease are recognised at the lower of the present value of the minimum lease payments and the fair value
of the asset.