Page 48 - Nanyang Technological University

NOTES TO FINANCIAL STATEMENTS
(cont’d)
31 March 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.6 Property, plant and equipment (cont’d)

Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets
are assessed and if a component has a useful life that is different from the remainder of that asset, that component
is depreciated separately.

Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment.

Except for freehold land and buildings under construction which are not depreciated, depreciation on other
property, plant and equipment is recognised in the statement of profit or loss and other comprehensive income
on a straight-line basis over the estimated useful lives (or lease term, if shorter) of each part of an item of property,
plant and equipment.

The estimated useful lives are as follows:

Buildings and infrastructure 3 to 30 years
Renovation 5 years
Machinery, laboratory and workshop equipment 6 years
Furniture and office equipment 3 to 5 years
Transportation equipment 8 years
Others 8 years

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the
effect of any changes in estimate accounted for on a prospective basis.

Buildings under construction are stated at cost, less any recognised impairment loss, if any. Expenditure relating
to the construction of projects are capitalised when incurred. No depreciation is charged on building under
construction until the building under construction is completed and the related property, plant and equipment
are transferred to the respective property, plant and equipment categories and depreciated accordingly.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the assets
shall be fully depreciated over the shorter of the lease term and their useful lives.

46 NTU ANNUAL REPORT 2016