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3. Depreciation
Depreciation is calculated towrite off the cost of items of property, plant and equipment less their estimated residual
values using the (straight‑line method) 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 period whichever is less
Depreciationmethods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
4. Reclassification to investment property
The reclassification of assets to investment property when the use of a property changes from owner‑occupied to
investment property.
5. Project under construction
The projects under construction recognized at cost. All expenses related to cost includes direct and necessary to pre-
pare the asset to the state that is ready to use and in the purpose for which it was acquired for. The asset transferred
fromprojects under construction to fixed assets when it is completed and ready to use.
J. Intangible assets and goodwill
1. Recognition and measurement
I.
Goodwill:
Arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.
II. Other intangible assets:
Other intangible assets, including patents and trademarks, that are acquired by the Group and have finite useful
lives are measured at cost less accumulated amortization and any accumulated impairment losses.
III. Computer software
Costs associated with developing or maintenance of computer software programmes are recognised as an expense
as incurred. Costs that are directly associated with identifiable and unique software products controlled by the
Company and will probably generate future economic benefits beyond one year, are recognised as intangible assets.
Expenditure, which enhances or extends the performance of computer software programmes beyond their original
specifications is recognised as a capital improvement and added to the original cost of the software. Expenditure to
acquire computer software is capitalized and included as an intangible asset. Computer software costs recognised
as assets are amortised using the straight-line method over their useful lives and not exceeding a year of 3 years.
IV. Knowhow
The amounts paid against knowhow are recognized as intangible assets in case of knowhow have a finite useful life
and amortized over their estimated useful lives.
1. Subsequent expenditure
Subsequent expenditure iscapitalisedonlywhenthe intangibleassetwill increase the futureeconomicbenefitsembodied
in project, research, and development under constructionwhich is recognized as intangible assets. All other expenditure,
including expenditure on internally generatedgoodwill andbrands, is recognised inprofit or loss as incurred.
2. Amortization
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the
(straight‑line method) over their estimated useful lives, and is generally recognised in profit or loss.
Goodwill is not amortised.
Amortizationmethods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
K. Investment property
Investment property is property held by the Group for rental or rise in value, or both and initially measured at cost
and subsequently at cost less accumulated depreciation and impairment, and recognize in profit and loss the depre-
ciation expenses and impairment losses.
The depreciation of investment property calculated using (straight-linemethod) over their estimated useful lives for
each type of investment property, land is not depreciated.
Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from
disposal and the carrying amount of the item) is recognised in profit or loss.
L. Assets held for sale
Non‑current assets, or disposal groups comprising assets and liabilities, are classified as held‑for‑ sale if it is highly
probable that they will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less
costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets
and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets,
employee benefit assets, investment property or biological assets, which continue to be measured in accordance
with the Group’s other accounting policies.
Impairment losses on initial classification as held‑for‑sale or held‑for‑ distribution and subsequent gains and losses
on re-measurement are recognised in profit or loss.
Once classified as held‑for‑sale, intangible assets and property, plant and equipment are no longer amortised or
depreciated, and any equity‑accounted investee is no longer equity accounted.
102 • 2017 ANNUAL REPORT
2017 ANNUAL REPORT • 103
GB Auto (S.A.E.)
Notes to the consolidated financial statements for the financial year ended December 31, 2017
(In the notes all amounts are shown in Thousand Egyptian Pounds unless otherwise stated)