Page 91 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
85
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
1 Significant Accounting Policies (Continued)
(h) Property, plant and equipment
Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and
impairment losses (see note 1(j)).
The cost of property, plant and equipment comprises the purchase price and any directly attributable costs of
bringing the asset to its working location and condition for its intended use. Subsequent expenditure relating to
an item of property, plant and equipment that has already been recognized is added to the carrying amount of
the asset when it is probable that future economic benefits, in excess of the originally assessed standard of
performance of the existing asset, will flow to the enterprise. All other subsequent expenditure is recognized as
an expense in the period in which it is incurred.
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
recognized in profit or loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated
residual value, if any, using the straight-line method over their estimated useful lives as follows:
Buildings 8–30 years
Telecommunications transceivers, switching centers,
transmission and other network equipment
5–10 years
Office equipment, furniture and fixtures and others 3–10 years
Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is
allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of
an asset and its residual value, if any, are reviewed annually.
(i) Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group
determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in
return for a payment or a series of payments. Such a determination is made based on an evaluation of the
substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
(i) Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to the Group substantially all the risks and
rewards of ownership are classified as being held under finance leases. Leases which do not transfer
substantially all the risks and rewards of ownership to the Group are classified as operating leases.