(coco) #1

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

(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

■ Buildings 30 years
■ Machinery 2 to 10 years
■ Motor vehicles 5 years
■ Electronic and other

2 to 5 years

■ Decoration and leasehold

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)).
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