164 MKH BERHAD | ANNUAL REPORT 2023 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (j) Property, plant and equipment (Cont’d) (iii) Depreciation (Cont’d) Bearer plants are derecognized upon disposal or when no future economic benefits are expected from its use. Any gains or losses on disposal of bearer plants are recognized in profit or loss in the year of disposal. The residual values and useful lives of bearer plants are reviewed, and adjusted as appropriate, at each reporting date. (k) Property, plant and equipment under hire-purchase arrangement Property, plant and equipment acquired under hire-purchase arrangement are capitalised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to profit or loss to give a constant periodic rate of interest on the remaining hirepurchase obligations. (l) Prepaid lease payments The upfront payments for right to use the leasehold land over a predetermined period are accounted for as prepaid lease payments that are stated at cost less accumulated amortisation, are amortised over the lease term on a straight-line basis, except for leasehold land classified as investment property. (m) Intangible assets (i) Goodwill Goodwill arises on the acquisition of subsidiaries is identified as any excess of the consideration paid over the Group’s share of fair value of the identifiable assets, liabilities and contingent liabilities acquired as at the date of acquisition. Goodwill is initially measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Goodwill acquired is allocated to the cash-generating units (“CGU”) expected to benefit from the acquisition synergies. An impairment loss is recognized in profit or loss when the carrying amount of the CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount is the higher of the CGU’s fair value less costs to sell and its value in use. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. The total impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. Impairment loss on goodwill is not reversed in a subsequent period. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
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