MKH BERHAD | ANNUAL REPORT 2023 163 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (j) Property, plant and equipment (Cont’d) (iii) Depreciation Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Freehold land is not amortised. Property, plant and equipment under construction are not depreciated until these assets are ready for their intended use. The principal annual rates for the current and comparative financial years are as follows: Long-term leasehold land Over lease period of 78 to 99 years Buildings 2% to 12.5% Motor vehicles, plant and machinery 5% to 20% Furniture, fittings and equipment 10% to 25% Plantation infrastructure 12.5% Bearer plants 20 years, or over the lease period if shorter The depreciable amount is determined after deducting the residual value. Depreciation methods, useful lives and residual values are reassessed at the reporting date. Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these property, plant and equipment. Bearer plants are living plants that are used in the production or supply of agricultural produce, which are expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. Bearer plants (oil palm trees) include mature plantations and immature plantations that are established or are acquired by the Group. Mature plantations are stated at cost, less accumulated depreciation and any impairment losses where the recoverable amount of the asset is estimated to be lower than its carrying amount. Depreciation is charged so as to write off the cost of mature plantations, using the straight-line method, over the estimated useful lives of 20 years or over the lease period, whichever is shorter. Immature plantations are initially stated at cost. Subsequent to recognition, immature plantations are stated at cost less impairment loss. The costs of immature plantations consist mainly of the accumulated cost of planting, fertilising and maintaining the plantation, including borrowing costs on such borrowings and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. An oil palm plantation is considered mature when such plantation starts to produce at the end of the fourth year. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
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