FGV Annual Report 2013

Felda Global Ventures Holdings Berhad 202 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013 3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (Cont’d.) (l) Intangible assets (Cont’d.) The nature of the intangible assets are as follows: (i) Brand is related to a sugar brand ‘Prai’ acquired as part of the acquisition of the sugar business. (ii) Completed technology is related to a license for a subsidiary to use certain technologies involved with producing oleic tallow. (iii) Lease agreement is related to a lease agreement for a subsidiary to lease several assets to a customer, acquired as part of a business combination. Twin Rivers Technologies Holdings, Inc. (“TRTH”), is the lessor of a portion of its facility to a tenant under a non-cancellable operating lease. This property includes natural oil tanks and an oil pipeline system. (iv) Customer relationships are related to contracts for a subsidiary to sell its product to several customers. (v) Trade name is related to the trade name ‘Twin Rivers Technologies’ acquired as part of the acquisition of the fatty acids business operation in USA. (vi) Software relates to information technology (“IT”) used within the Group. (vii) Intangible assets under development relates to IT system under development and land use rights for an oil palm plantation in Kalimantan, Indonesia, that is still subject to relevant approvals from the authorities. (m) Biological assets Oil palm and rubber plantations Biological assets are new development costs which are accounted for under the capital maintenance method. Under the capital maintenance method, planting development costs incurred (for example land clearing and upkeep of trees) up to the maturity period of zero (0) to three (3) years for oil palm and zero (0) to seven (7) years for rubber are capitalised and not amortised, and are shown as a non- current asset net of accumulated impairment losses. Biological assets will be subject to accelerated depreciation if the existing planted area has been earmarked by the Directors for replanting with a different crop, after writing down the carrying amount to its recoverable amount. Replanting expenses are charged to profit or loss in the year in which they are incurred. When the planted area is replanted with a different crop, the carrying value of the existing biological assets is expensed off in profit or loss and the planting development costs in respect of the new crop is capitalised. Land reclaimed by FELDA in accordance with the provisions of the LLA, the carrying value of the biological assets on the said land is derecognised in profit or loss at the earlier of end of the contractual notice period or date taken over by FELDA, if earlier. Nursery Nursery costs comprise costs of oil palm and rubber seedlings and the associated development costs incurred (for example fertilising and weeding) in preparing the nursery. Nursery costs relating to new planting are transferred to oil palm and rubber plantations upon reaching a certain level of maturity, which is between ten (10) to twelve (12) months for oil palm and five (5) to six (6) months for rubber, while other types (resold or replanted) are charged to profit or loss. Where an indication of impairment exists, the carrying amount of the biological asset is assessed and written down immediately to its recoverable amount. See significant accounting policies Note 3(o) on impairment of non-financial assets.