2. Significant accounting policies (cont’d.) 2.5 Significant accounting estimates and judgements (cont’d.) (c) Change in estimates The cost of ships is depreciated on a straight-line basis over the assets’ useful life. During the year, the Group and the Corporation revised the estimated useful life of its ships based on the consideration of the rapid changes in the design and technology of ships in the industry. The Group and the Corporation have decreased the useful life of the ships to 20 years - 40 years from previously 25 years - 40 years. The revision was accounted for prospectively as a change in estimate and the effect of these changes on depreciation expenses charged in current and future periods are as follows: 2016 2017 2018 Later RM’000 RM’000 RM’000 RM’000 Group Increase in depreciation expenses 389,228 379,794 379,772 1,065,890 Corporation Increase in depreciation expenses 50,310 50,310 50,310 150,931 3. Revenue Group Corporation 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000 Charter and lightering income 6,972,257 7,200,129 989,427 1,101,048 Freight income 389,818 453,957 92,769 453,957 Construction contracts 932,089 2,254,440 – 147,399 Other shipping related income 87,659 411,327 25,709 16,476 Finance income on lease receivables 645,104 366,047 10,831 – Non-shipping income 570,312 222,486 – – 9,597,239 10,908,386 1,118,736 1,718,880 Non-shipping income mainly represents revenue generated from the operation and maintenance of offshore floating assets, management of operation of ports, marine terminals and marine vessels, provision of marine support services and consulting services for marine matters. MISC BERHAD • Annual Report 2016 204 notes to the financial statements - 31 december 2016
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