Annual Report 2020

2. Summary of significant accounting policies ( cont'd.) 2.5 Property, plant and equipment Property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Costs also include borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (refer to accounting policy Note 2.19 on borrowing costs). Where significant parts of an item of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts in the carrying amount of the property, plant and equipment as a replacement when it is probable that future economic benefits associated with the parts will flow to the Group and the cost of the parts can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred. Freehold land is not depreciated. Significant parts of other item of property, plant and equipment are depreciated separately over their estimated useful lives in accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’. Depreciation is calculated using the straight-line method to write-off the cost of the assets to their residual values over their estimated useful lives. Aircraft - engines, airframes and spare engines excluding service potential 25 years - service potential of engines 8 years - service potential of airframes 13 years - service potential of spare engines 11 years Aircraft spares 10 years Aircraft fixtures and fittings Useful life of aircraft or remaining lease term of aircraft, whichever is shorter Buildings 28.75 years Motor vehicles 5 years Office equipment, furniture and fittings 5 years Office renovation 5 years Simulator equipment 25 years Operating plant and ground equipment 5 years In-flight equipment 5 years Training equipment 5 years Service potential of 8 years represents the period over which the expected cost of the first major aircraft engine overhaul is depreciated. Subsequent to the engine overhaul, the actual cost incurred is capitalised and depreciated over the subsequent 8 years. Service potential of 13 years for airframes represents the period over which the expected cost of the first major airframe check is depreciated. Subsequent to the airframe check, the actual cost incurred is capitalised and depreciated over the subsequent 13 years. Assets not yet in operation are stated at cost and are not depreciated until the assets are ready for their intended use. Useful lives of assets are reviewed and adjusted if appropriate, at the balance sheet date. Notes to the Financial Statements For the financial year ended 31December 2020 192 AIRASIA GROUP BERHAD