Minerva Equity Limited - 31 March 2019 Final 19.08.2019 - Flipbook - Page 35
Minerva Equity Limited (formerly DMWSL 881 Limited)
Notes to the financial statements
for the period ended 31 March 2019 (continued)
3 Summary of significant accounting policies (continued)
Leased assets
At inception, the Company assesses agreements that transfer the right to use assets to the
Company. The assessment considers whether the arrangement is, or contains, a lease based on the
substance of the arrangement.
Finance leased assets
Lease of assets that transfer substantially all the risks and rewards incidental to ownership are
classified as finance leases.
Finance leases are capitalised at commencement of the lease as fixed assets at the fair value of the
leased asset, or if lower, the present value of the minimum lease payments calculated using the
interest rate implicit in the lease. Where the implicit rate cannot be determined the Company’s
incremental borrowing rate is used. Incremental direct costs, incurred in negotiating and arranging
the lease, are included in the cost of the asset.
Assets are depreciated over the shorter of the lease term and the estimated useful life of the asset.
Assets are assessed for impairment at each reporting date.
The capital element of lease obligations is recorded as a liability on inception of the arrangement.
Lease payments are apportioned between capital repayment and finance charge, using the effective
interest rate method, to produce a constant rate of charge on the balance of the capital repayments
outstanding.
Operating leased assets
Leases that do not transfer all the risks and rewards of ownership are classified as operating leases.
Payments under operating leases are charged to the profit and loss account on a straight-line basis
over the period of the lease.
Lease incentives
Incentives received to enter into a finance lease reduce the fair value of the asset and are included in
the calculation of present value of minimum lease payments.
Incentives received to enter into an operating lease are credited to the profit and loss account, to
reduce the lease expense, on a straight-line basis over the period of the lease.
Investments
Investment in a subsidiary company is stated at historical cost less accumulated impairment losses.
Inventories
Inventories are stated at the lower of historical cost and estimated selling price less costs to
complete and sell. Inventories are recognised as an expense in the period in which the related
revenue is recognised.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities.
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