annual_report_2019_en

98 Huawei Investment & Holding Co., Ltd.

■ Financial liabilities at amortised cost

Financial liabilities, except those designated

as at FVPL, are stated at amortised cost

using the effective interest method.

Interest is included in finance expenses

unless capitalised into property, plant and

equipment (see note 3(t)).

■ Financial liabilities designated as at FVPL

The Group has irrevocably designated

certain financial liabilities as at FVPL

on initial recognition because they

are managed and their performance

is evaluated on a fair value basis and

information is provided internally on that

basis to the Group’s key management

personnel.

(f) Investment property

Investment properties are land and buildings

which are owned or held under a leasehold

interest (see note 3(j)) to earn rental income

and/or for capital appreciation.

Investment properties are stated at cost less

accumulated depreciation (see note 3(g)

(ii)) and impairment losses (see note 3(k)).

Rental income from investment properties is

accounted for as described in note 3(q)(ii).

(g) Other property, plant and equipment

(i) Cost

Items of property, plant and equipment are

stated at cost less accumulated depreciation

and impairment losses (see note 3(k)).

Cost includes expenditure that is directly

attributable to the acquisition of the assets

including for self-constructed assets, the cost

of materials, direct labour, the initial estimate,

where appropriate, of the costs of dismantling

and removing the items and restoring the site

on which they are located, and an appropriate

proportion of production overheads and

borrowing costs.

Construction in progress is transferred to other

property, plant and equipment when it is ready

for its intended use.

Gains or losses arising from the retirement

or disposal of an item of property, plant and

equipment are determined as the difference

between the net disposal proceeds and

the carrying amount of the item and are

recognised in profit or loss on the date of

retirement or disposal.

(ii) Depreciation

Depreciation is calculated to write off the cost

of items of property, plant and equipment

and investment property, less their estimated

residual value, if any, using the straight line

method over their estimated useful lives as

follows:

■ Buildings 30 years

■ Machinery 2 to 10 years

■ Motor vehicles 5 years

■ Electronic and other

equipment

2 to 5 years

■ Decoration and leasehold

improvements

2 to 5 years

Where components of an item of property,

plant and equipment and investment property

have different useful lives, the cost or valuation

of the item is allocated on a reasonable basis

between the parts and each part is depreciated

separately. Both the useful life of an item of

property, plant and equipment and investment

property and its residual value, if any, are

reviewed annually.

Freehold land and construction in progress are

not depreciated.

(h) Long-term leasehold prepayments

Long-term leasehold prepayments represent

land premium paid, resettlement fees and

related expenses incurred in obtaining the

relevant land use rights.

Policy applied from January 1, 2019

The Group’s leasehold prepayments meet the

definition of a lease and they are accounted

for in accordance with the accounting policies

set out in note 3(j).

Policy applied before January 1, 2019

Long-term leasehold prepayments are carried

at cost, less accumulated amortisation and

impairment losses (see note 3(k)).