Page 89 - 2596-CA SR Lanka- Annual Report 2022

1.6.4 Responsibility and Approval of a) Defined Benefit Plans (b) Depreciation
Financial Statements The cost of the retirement benefit Depreciation is calculated by
The Council of The Institute of Chartered plan of employees is determined using a straight-line method on
Accountants of Sri Lanka acknowledges using Projected Unit Credit (PUC) the cost of all property, plant and
their responsibility for the financial method. Such method involves equipment, in order to write-off
statements and financial statements were use of assumptions concerning such amounts over the estimated
approved and authorised for issue by the the rate of interest, rate of salary useful life of such assets.
Council at the meeting held on 27 March increase and retirement age. Due
2023. to the long-term nature of the The estimated useful lives of
plan, such estimates are subject to assets are as follows;
1.6.5 Materiality and Aggregation significant uncertainty.
Asset category Useful life (years)
Each material class of similar items is
presented separately in the financial b) Estimating the Incremental Buildings 50
statements. Items of a dissimilar nature or Borrowing Rate Furniture 5- 10
function are presented separately, unless As the Institute cannot readily Plant and Machinery 5-10
they are immaterial. determine the interest rate implicit Motor vehicles 10
in the lease, it uses its incremental
1.6.6 Functional and Presentation borrowing rate (IBR) to measure Computers 5
Currency the lease liabilities. IBR is rate of Depreciation of an asset begins when it is
The financial statements are presented in interest that a lessee would have available for use and ceases at the earlier
Sri Lankan Rupees, which is the Institute’s to pay to borrow similar facility of the date that the asset is classified as
functional and presentation currency, in from a financial institution. held for sale and the date that the asset is
the primary economic environment in derecognised.
which the Institute operates. c) Changes in Accounting Estimates
and Judgments
Significant items of property, plant and
All financial information presented in Any changes in accounting equipment with different useful lives are
Sri Lankan Rupees have been rounded estimates and critical judgements separately identified and depreciated.
to the nearest thousand, unless stated are disclosed in the relevant notes
otherwise. to the financial statements. Depreciation on property, plant and
equipment purchased through restricted
1.7 Significant Accounting Estimates 2. Summary of Significant funds is charged to the statement
and Judgments Accounting Policies of comprehensive income. The
The preparation and presentation of 2.1 Assets and the Bases of Their correspondent grant amount is amortised
financial statements, in conformity with Valuation over the useful life of the related asset.
Sri Lanka Accounting Standards, requires 2.1.1 Property, Plant and Equipment
Management to make judgments, (a) Basis of Recognition and (c) Right of Use Assets and Lease
estimates and assumptions that affect Measurement Liabilities
the application of accounting policies and The Institute recognises a right-of-use
reported amounts of assets, liabilities, Property, plant and equipment asset and a lease liability at the lease
income and expenses. Actual results are recognised if it is probable commencement date. Right-of-use
may differ from these estimates and that future economic benefits assets are measured at cost, less
judgments used. associated with the asset will flow any accumulated depreciation and
to the Institute and the cost of the impairment losses, and adjusted for any
Estimates and underlying assumptions are asset can be measured reliably. remeasurement of lease liabilities. The
reviewed on an ongoing basis. Revisions All property, plant and equipment cost of right-of-use assets includes the
to accounting estimates are recognised are stated initially at cost and amount of lease liabilities recognised,
in the period in which the estimate is subsequently measured at cost initial direct costs incurred, and lease
revised, if the revision affects only that less accumulated depreciation and payments made at or before the
period or in the period of the revision and any impairment losses. Repair and commencement date less any lease
future periods if the revision affects both maintenance cost are recognised incentives received. Right-of-use assets
current and future periods. are depreciated on a straight-line basis
in the statement of comprehensive
income as incurred. The carrying over the shorter of the lease term and the
Information about significant areas value of property, plant and estimated useful lives of the assets.
of estimates, uncertainty and critical equipment are reviewed for
judgments in applying accounting policies impairment when events or The estimated useful lives of right of use
that have the most significant effects on changes in circumstances indicate assets are as follows;
the amounts recognised in the financial that carrying value may not be
statements is as follows.
recoverable.

CA SRI LANKA | Integrated Annual Report 2022 87