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ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2013
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
LEASING
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
Operating lease payments are recognised as expenses on a straight-line basis over the term of the lease except
where another systematic basis is more representative of the time pattern in which economic benefits from the leased
asset are consumed.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a
liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis,
except where another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed.
Leasehold land and building
When a lease includes both land and building elements, the Group assesses the classification of each element as
a finance or an operating lease separately based on the assessment as to whether substantially all the risks and
rewards incidental to ownership of each element have been transferred to the Group, unless it is clear that both
elements are operating leases in which case the entire lease is classified as an operating lease. Specifically, the
minimum lease payments (including any lump-sum upfront payments) are allocated between the land and the building
elements in proportion to the relative fair values of the leasehold interests in the land element and building element of
the lease at the inception of the lease.
To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted
for as an operating lease is presented as “prepaid lease payments” in the statements of financial position and
is amortised over the lease term on a straight-line basis. When the lease payments cannot be allocated reliably
between the land and building elements, the entire lease is generally classified as a finance lease and accounted for
as property, plant and equipment.