151 Note 1 Significant accounting policies (continued) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful life. Gains and losses on the disposals are determined by comparing proceeds with the carrying amount. These are included in the Consolidated Statement of Profit and Loss within the category of other income. i) Capital work-in-progress The cost of property, plant, and equipment (PPE) under construction at the reporting date is disclosed as ‘capital work-in-progress.’ This cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Advances paid for the acquisition | construction of PPE which are outstanding at the Balance Sheet date are classified under the ‘Capital advances.’ j) Other intangible assets Computer software includes enterprise resource planning applications and other costs relating to such software that provide significant future economic benefits. These costs comprise license fees and cost of system integration services. Development expenditure qualifying as an intangible asset, if any, is capitalised, to be amortised over the economic life of the product | patent. Computer software cost is amortised over three years using the straight-line method. k) Impairment The carrying amount of assets are reviewed at each Consolidated Balance Sheet date to assess if there is any indication of impairment based on internal | external factors. An impairment loss on such assessment will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is either the net selling price in use, whichever is higher. While assessing the value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of the capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that the carrying amount of the assets does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognised. l) Cash and cash equivalents Cash and cash equivalents include cash in hand, demand deposits with bank and other short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. m) Statement of cash flows Cash flows are reported using the indirect method, where profit for the period is adjusted for the effects of non-cash transactions, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash generated from | (used) in operating, investing and financing activities of the Group are segregated.
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