UNBOUNCE - EXAMPLE PAGE-REPORT-ENTERPRISE DOCUMENT-KINGSPAN - Flipbook - Page 138
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021 (continued)
1
Statement of Accounting Policies (continued)
The estimated useful lives and residual
values of property, plant and equipment
are determined by management at
the time the assets are acquired and
subsequently, re-assessed at each
reporting date. These lives are based on
historical experience with similar assets
across the Group.
In accordance with IAS 36 Impairment of
Assets, the carrying values of property,
plant and equipment are reviewed at
each reporting date to determine whether
there is any indication of impairment.
An impairment loss is recognised
whenever the carrying value of an asset
or its cash generating unit exceeds its
recoverable amount.
Impairment losses are recognised in the
Consolidated Income Statement. Following
the recognition of an impairment loss, the
depreciation charge applicable to the asset
or cash-generating unit is adjusted to
allocate the revised carrying amount, net
of any residual value, over the remaining
useful life.
Assets under construction are carried at
cost less any recognised impairment loss.
Depreciation of these assets commences
when the assets are ready for their
intended use.
Leases
The Group recognises right of use assets
representing its right to use the underlying
assets and lease liabilities representing
its obligation to make lease payments
at the lease commencement date. The
right of use assets are initially measured
at cost, and subsequently measured
at cost less accumulated depreciation
and impairment losses. The cost of the
right of use asset consists of the initial
measurement of the lease liability, any
initial direct costs incurred in entering
into the lease, restoration costs and any
payments made on or before the lease
commencement date, net any lease
incentives received.
Depreciation is provided on a straight
line basis over the period of the lease,
or useful life if shorter.
Lease liabilities are measured at the
present value of the future lease
payments, discounted at the Group’s
incremental borrowing rate. Subsequent
to the initial measurement, the lease
liabilities are increased by the interest cost
and reduced by lease payments made.
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The right of use assets and lease liabilities
are remeasured when there are changes in
the assessment of whether an extension
option is reasonably certain to be exercised
or a termination option is reasonably
certain not to be exercised or where there
is a change in future lease payments as
a result of a change in an index or rate.
The Group applies judgement when
determining the lease term where renewal
and termination options are contained in
the lease contract.
The Group applies the short-term lease
recognition exemption to leases that
have a lease term of 12 months or less
from the commencement date. The
Group also applies the lease of low-value
assets recognition exemption to leases
of equipment that are considered to be
low value. Lease payments on short-term
leases and leases of low-value assets are
recognised as an expense on a straight-line
basis over the term of the lease.
Retirement benefit obligations
The Group operates defined contribution
and defined benefit pensions schemes.
Defined contribution pension schemes
The costs arising on the Group’s defined
contribution schemes are recognised in
the Consolidated Income Statement in
the period in which the related service
is provided. The Group has no legal or
constructive obligation to pay further
contributions in the event that these plans
do not hold sufficient assets to provide
retirement benefits.
Defined benefit pension schemes
The Group’s net obligation in respect
of defined benefit plans is calculated
separately for each plan by estimating the
amount of future benefit that employees
have earned in return for their service in
the current and prior periods, discounting
that amount and deducting the fair value
of any plan assets.
The calculation is performed annually by
a qualified actuary using the projected
unit credit method. When the calculation
results in a benefit to the Group, the
recognised asset is limited to the total of
any unrecognised past service costs and
the present value of economic benefits
available in the form of any future refunds
from the plan or reductions in future
contributions to the plan.
Remeasurements of the net defined
benefit liability or asset, which comprise
actuarial gains and losses, the return
on plan assets (excluding interest)
and the effect of the asset ceiling,
are recognised immediately in other
comprehensive income.
The Group determines the net interest
expense on the net defined benefit liability
or asset by applying the discount rate
used to measure the defined benefit
obligation at the beginning of the annual
period to the then net defined benefit
liability or asset, taking into account any
changes in the net defined benefit liability
or asset during the period as a result of
contributions and benefit payments.
Net interest expense and other expenses
related to defined benefit plans are
recognised in profit or loss.
When the benefits of a plan are changed
or when a plan is curtailed, the resulting
change in benefit that relates to past
service or the gain or loss on curtailment
is recognised immediately in profit or loss.
The Group recognises gains and losses on
the settlement of a defined benefit plan
when the settlement occurs.
Provisions
A provision is recognised in the
Consolidated Statement of Financial
Position when the Group has a present
constructive or legal obligation as a
result of a past event and it is probable
that an outflow of economic benefit will
be required to settle the obligation and
the amount of the obligation can be
estimated reliably.
A specific provision is created when a claim
has actually been made against the Group
or where there is a known issue at a known
customer’s site, both relating to a product
or service supplied in the past. In addition, a
risk-based provision is created where future
claims are considered incurred but not
reported. The warranty provision is based
on historical warranty data and a weighting
of all possible outcomes against their
associated probabilities.
