FGV Annual Report 2017

FELDA GLOBAL VENTURES HOLDINGS BERHAD FINANCIAL STATEMENTS 156 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. (continued) (m) Biological assets Forest Standing timber on privately held forest land is characterised as biological asset. The Group recognised forest as biological asset subsequent to the acquisition of plantation estates owned by FELDA pursuant to the Land Lease Agreement (Note 45), where the plantation estates acquired included timber which already existed on these estates. Under the capital maintenance method, forest is 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 forest area has been earmarked by the Directors for replanting with a different crop, after writing down the carrying amount to its recoverable amount. When the forest 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 is recognised in accordance with FRS 116 “Property, Plant and Equipment” (Note 3(j)). Livestock (i) Cattle Cattle are raised for grazing purposes, of which there is nomanagement over the transformation of the biological assets. Purchased cattle are initially stated at cost. Cattle are stated at cost less accumulated depreciation and impairment losses. The cost of a cattle initially recognised includes its purchase price and any cost that is directly attributable to bringing the cattle to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs that are directly attributable to the acquisition or production of a qualifying asset. New-born cattle are stated at standard cost based on market value of cattle ageing below 3 months as at valuation date. Cattle are depreciated on a straight line basis to write off the cost over their estimated useful lives of 5 years. (ii) Canine Canine are bred and trained for security purposes. All direct costs for canine are accumulated until it matures. Subsequent to that, the costs that have been capitalised are amortised based on a straight line method over its expected useful productive life. The estimate maturity period for canine are 2 years old, having completed all required training and applying 8 years as the period of amortisation. 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.