152 KIMLUN CORPORATION BERHAD • NOTES TO THE FINANCIAL STATEMENTS 200901023978 (867077-X) Kimlun Corporation Berhad (Incorporated in Malaysia) 2. Material accounting policy information (cont'd) 2.15 Right-of-use assets and lease liabilities (a) Short-term leases and leases of low-value assets (b) Right-of-use assets (c) Lease liabilities 2.16 Assets held for sale 2.17 Revenue from contracts with customers (a) Construction contracts Assets that are expected to be recovered primarily through sale rather that through continuing use are classified as held for sale. Immediate before classification as held for sale, the assets are remeasured in accordance with the Group's accounting policies. Upon classification as held for sale, the assets are not depreciated and are measured at the lower of their previous carrying amount and fair value less cost to sell. Any differences are recognised in profit or loss. Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the entities' incremental borrowing rate. Subsequent to the initial recognition, the lease liabilities are measured at amortised cost and adjusted for any lease reassessment or modifications. The right-of-use assets are depreciated using the straight-line method from the commencement date to the end of the estimated useful lives of their right-of-use assets or the end of the lease term, whichever is earlier. The Group contracts with its customers for construction services. Revenue from construction contracts is recognised over time using the input method, which is based on the actual cost incurred to date on the construction project as compared to the total budgeted cost for the respective construction project. The Group and the Company apply the "short-term lease" and "lease of low-value assets" recognition exemption. For these leases, the Group and the Company recognise the lease payments as an operation expense on a straight-line method over the term of the lease unless another systematic basis is more appropriate. Right-of-use assets are initially measured at cost. Subsequent to the initial recognition, the right-of-use assets are stated at cost less accumulated depreciation and any accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. - 32 -
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