Page 45 - Nanyang Technological University

ON A RAPID RISE

NOTES TO
FINANCIAL STATEMENTS (CONT’D)

31 March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.6 Property, plant and equipment

Recognition and measurement

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses
except for land alienated to the Group and University Company which are stated at values provided by
the Government. Donated assets are stated at valuation at initial recognition.

The freehold land of the Group and the University Company were stated at valuation carried out in
December 1987 based on values in a valuation report from the Commissioner of Lands. The revaluation
was done on a one-off basis and accordingly, the transitional provision in FRS 16 — Property, Plant
and Equipment was adopted to continue with its existing policy of stating the freehold land at deemed
cost. This revaluation surplus was credited directly to the Capital Account. Upon disposal, any related
revaluation surplus is transferred from the Capital Account to accumulated surplus and is not taken into
account in arriving at the gain or loss on disposal.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributable to
bringing the asset to a working condition for its intended use, and the costs of dismantling and removing
the items and restoring the site on which they are located. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.

Property, plant and equipment costing less than $2,000 each, renovation costing $100,000 and below and
library books are generally charged to the profit or loss in the year of purchase.

The gain or loss on disposal of an item of property, plant and equipment recognised in the profit or loss is
derived from the proceeds from disposal and the carrying amount of property, plant and equipment.

Subsequent cost

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will flow to
the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant
and equipment are recognised in the profit or loss as incurred.

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