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H Inventories
Inventories are valued at cost or net realisable value whichever is lower. Cost is determined by the weighted average method.
The cost of finished goods and work in progress comprises rawmaterials, direct labour, other direct costs and an appropriate
share of production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
I
Property, plant and equipment
1 Recognition and measurement
Items of property, plant and equipment aremeasured at cost less accumulated depreciation and any accumulated impairment
losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as
separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an itemof property, plant and equipment is recognised in profit or loss.
The modified cost model was adopted which the cost and accumulated depreciation for some categories of fixed assets (Ma-
chinery and equipment, Vehicles, Furniture and office equipment, Tools and supplies) aremodified usingmodification factors
stated in annex (A) of EAS no. (13). The increase of net fixed assets which are qualified to modification, were recognized in
other comprehensive income items and was presented as a separate item in equity under the name of “modification surplus of
fixed assets”. The realized portion of modification surplus of fixed assets is transferred to retained earnings or losses in case
of disposal or abandonment of the asset which qualified for modification or usage (depreciation difference resulting from the
adoption of the special accounting treatment) , as described in details in note no.(7).
2 Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure
will f low to the Group.
3 Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values
using the (straight
‑
linemethod) over their estimated useful lives for each item, and is generally recognised in profit or loss.
Land is not depreciated. Estimated depreciation rates for each type of assets for current and comparative periods are as follow:
Asset
Depreciation rate
Buildings
2% - 4%
Machinery & equipment
10% - 20%
Vehicles
20% - 25%
Fixtures &Office furniture
6% - 33%
IT infrastructures & Computers
25%
Leasehold improvements
20% - or lease periodwhichever is less
Depreciationmethods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
4 Reclassification to investment property
Thereclassificationofassetstoinvestmentpropertywhentheuseofapropertychangesfromowner
‑
occupiedtoinvestmentproperty.
2016 ANNUAL REPORT
100
GB Auto (S.A.E.)
Notes to the consolidated financial statements for the financial year ended December 31, 2016
(In thenotes all amounts are shown inThousandEgyptianPounds unless otherwise stated)