AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 121 (c) Current and Deferred Tax for the Year Current and deferred tax are recognised as an expense or income in proit or loss, except when they relate to items that are recognised outside proit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside proit or loss. Investment Properties Investment properties are properties held to earn rentals and/or capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. All of the Group’s property interests held under operating leases to earn rentals or for capital appreciation purposes are accounted for as investment properties and are measured using the fair value model. Gain and losses arising from changes in the fair value of investment properties are included in proit or loss in the period in which they arise. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic beneits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the diference between the net disposal proceeds and the carrying amount of the asset) is included in proit or loss in the period in which the property is derecognised. Equipment Equipment are stated at cost less accumulated depreciation and any impairment losses. Equipment are depreciated on the straight-line method at an annual rate of 10% based on its estimated useful lives. The estimated useful lives, residual values and depreciation method of equipment are reviewed at the end of each reporting period, with the efect of any change in estimates accounted for prospectively. Gain or loss arising from the disposal of an asset is determined as the diference between the net disposal proceeds and the carrying amount of the asset, and is recognised in proit or loss. Impairment of Non-Financial Assets At the end of each reporting period, the Group and the Fund review the carrying amounts of their non-inancial assets to determine whether there is any indication that those assets have sufered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group and the Fund estimate the recoverable amount of the cash- generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash lows are discounted to their present value using a pre-tax discount rate that relects current market assessments of the time value of money and the risks speciic to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in proit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that