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Gamuda Berhad (29579-T) • Annual Report 2012
2.
Summary of significant accounting policies (cont’d.)
2.28 Derivative financial instruments and hedge accounting (cont’d.)
Cash flow hedges (cont’d)
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Derivative instruments that are designated as, and are effective hedging instruments, are classified
consistent with the classification of the underlying hedged item. The derivative instrument is separated
into a current portion and non-current portion only if a reliable allocation can be made.
2.29 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing
costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their
intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist
of interest and other costs that the Group and the Company incurred in connection with the borrowing of
funds.
3.
Significant accounting estimates and judgements
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the reporting date. however, uncertainty about these assumptions and estimates could result
in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the
future.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
(a)
Depreciation and impairment of property, plant and equipment
The Group estimates the useful lives of property, plant and equipment based on the period over which the
assets are expected to be available for use. The estimated useful lives of the property, plant and equipment
are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear
and tear, technical or commercial obsolescences and legal or other limits on the use of the relevant assets.
In addition, the estimation of the useful lives of property, plant and equipment is based on internal technical
evaluation and experience with similar assets. It is possible, however, that future results of operations could
be materially affected by changes in the estimate of useful lives and residual values of property, plant and
equipment brought about by changes in factors mentioned above. The Group also performs annual review of
the assumptions made on useful lives and residual values to ensure that they continue to be valid.
NoTES To ThE FINANCIAL STATEMENTS
31 July 2012