62
GDS Global Limited Annual Report 2015
NOTES TO
FINANCIAL STATEMENTS
As at 30 September 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
LEASES - 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.
The Group as lessor
Amounts due from lessees under finance leases are recognised as receivables at the amount of the
Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as
to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of
the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the
relevant lease unless another systematic basis is more representative of the time pattern in which
use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the carrying amount of the leased asset and
recognised as an expense over the lease term on the same basis as the lease income.
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the statement of financial position as a finance
lease obligation. Lease payments are apportioned between finance charges and reduction of
the lease obligation so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to
qualifying assets, in which case they are capitalised in accordance with the Group’s general policy
on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in
which they are incurred.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over
the term of the relevant lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising
under operating leases are recognised as an expense in the period in which they are incurred.
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.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using
the straight-line method, on the following bases:
Renovations
10 years
Furniture and fittings
10 years
Computers
3 years
Motor vehicles
5 to 10 years
Machinery and equipment
5 to 10 years
Office equipment
10 years
