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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
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/ China Communications Services Corporation Limited
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Significant accounting policies
(continued)
(g) Property, plant and equipment
Property, plant and equipment are initially recorded at cost, less subsequent accumulated depreciation
and impairment losses (see note 2(l)). The cost of an asset comprises its purchase price, any directly
attributable costs of bringing the asset to working condition and location for its intended use and the
cost of borrowed funds used during the periods of construction. Expenditure incurred after the asset
has been put into operation, including cost of replacing part of such an item, is capitalised only when it
increases the future economic benefits embodied in the item of property, plant and equipment and the
cost can be measured reliably. All other expenditure is expensed as it is incurred.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are
determined as the difference between the net disposal proceeds and the carrying amount of the item
and are recognised in the consolidated income statement on the date of retirement or disposal.
Depreciation is provided to write off the cost of items of property, plant and equipment, less their
estimates residual value, if any, using the straight-line method over their estimates useful lives as
follows:
Buildings
20–30 years
Buildings improvements
5 years
Motor vehicles
5–10 years
Furniture, fixtures and other equipment
5–10 years
Both the useful life of an asset and its residual value, if any, are reviewed annually.
(h) Construction in progress
Construction in progress is stated at cost less impairment losses (see note 2(l)). Cost comprises direct
costs of construction and borrowing costs on related borrowed funds to the extent that they are
regarded as an adjustment to interest charges, during the period of construction.
Capitalisation of these costs ceases and the construction in progress is transferred to property, plant
and equipment and investment properties when substantially all the activities necessary to prepare
the asset for its intended use are completed. No depreciation is provided in respect of construction in
progress until it is completed and ready for its intended use.
(i) Lease prepayments
Lease prepayments represent land use rights paid to the PRC’s governmental authorities. Land use
rights are carried at cost and are charged to the consolidated income statement on a straight-line basis
over the respective periods of the rights.
(j) Intangible assets (other than goodwill)
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Expenditure on development activities is capitalised if the product or process is technically and
commercially feasible and the Group has sufficient resources and the intention to complete
development. The expenditure capitalised includes the costs of materials, direct labour and an
appropriate proportion of overheads and borrowing costs, where applicable (see note 2(z)). Capitalised
development costs are stated at cost less accumulated amortisation and impairment losses (see note
2(l)). Other development expenditure is recognised as an expense in the period in which it is incurred.