Page 90 - Continental Reinsurance 2022 Annual Report
P. 90
88 Statement of Significant Accounting Policies
years. For longer periods, a long-term growth rate is payments. The property is carried at fair value after
calculated and applied to project future cash flows initial recognition.
after the fifth year.
If an item of property, plant and equipment becomes
2.15 Reinsurance receivables an investment property because its use has changed,
Reinsurance receivables are recognised when due and any difference arising between the carrying amount
measured on initial recognition at the fair value of the and the fair value of this item at the date of transfer is
consideration received or receivable. Subsequent to recognised in other comprehensive income as a
initial recognition, reinsurance receivables are revaluation of property, plant and equipment.
measured at amortised cost, using the effective However, if a fair value gain reverses a previous
interest rate method. The carrying value of impairment loss, the gain is recognised in profit or loss.
reinsurance receivables is reviewed for impairment Upon the disposal of such investment property, any
whenever events or circumstances indicate that the surplus previously recorded in equity is transferred to
carrying amount may not be recoverable, with the retained earnings; the transfer is not made through
impairment loss recorded in the statement of profit or profit or loss.
loss. The amount of the allowance is set up in relation
to the time a receivable has been due and financial Investment properties are derecognised either when
condition of the debtor, and can be as high as the they have been disposed of, or when the investment
outstanding net balance. property is permanently withdrawn from use and no
future economic benefit is expected from its disposal.
Reinsurance receivables are derecognised when the Any gains or losses together with exchange gain or
derecognition criteria for financial assets, as described losses on the retirement or disposal of an investment
in Note 2.13.2, have been met. property are recognised in the profit or loss in the year
of retirement or disposal.
2.16 Investment properties
Property held for long-term rental yields and/or capital 2.17 Property, plant and equipment
appreciation that is not occupied by the Group is An asset is recognised when it is probable that
classified as investment property. Investment property economic benefits associated with the item will flow to
comprises of land and buildings. the Group and the cost of the item can be reliable
measured.
Investment property is measured initially at its cost,
including transaction costs. The cost of a purchased All property, plant and equipment items are initially
investment property comprises its purchase price and recorded at cost. They are subsequently stated at
any directly attributable expenditure. Directly historical cost less accumulated depreciation and
attributable expenditure includes, for example, impairment losses with the exception of freehold land
professional fees for legal services, property transfer (included in as part of freehold property) which is not
taxes and other transaction costs. depreciated. Historical cost includes expenditure that
is directly attributable to the acquisition of the assets.
Investment property is subsequently measured at fair
value. The fair value is determined annually by All repairs and maintenance cost are charged to other
independent valuation experts on the highest and operating expenses in the financial period in which
best-use basis. The fair value of investment properties they occur.
have been determined using the income approach as
this reflects the best use of the assets. Depreciation is calculated on assets using the straight-
line method to write down the cost of property, plant
Gains or losses arising from changes in the fair values and equipment to their residual values over their
of investment properties are included in the profit or estimated useful lives. The useful lives for the purpose
loss as "Fair value gains/loss on investment are:
properties” in the year in which they arise.
Motor vehicles 4 years
Property located on land that is held under an Furniture and Fittings 8 years
operating lease is classified as investment property as Computer Equipments 3 years
long as it is held for long-term rental yields. The initial Office Partitioning 8 years
cost of the property is the lower of the fair value of the Building 50 years
property and the present value of the minimum lease
