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96 I 2020 ANNUAL REPORT I financial reports

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 (CONTINuED)

2 sUMMarY of siGnificant accoUntinG policies (continued)
2.19 leases
company as lessee
Leases are recognised as right-of-use (“ROU”) asset and a corresponding liability at the date on which the leased asset
is available for use by the Company (i.e. the commencement date).
Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract
to the lease and non-lease components based on their relative stand-alone prices.
Lease term
In determining lease term, the Company considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not to exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably to be extended (or not to be terminated).
The Company reassess the lease term upon the occurrence of a significant event or change in circumstances that is
within the control of the Company and affects whether the Company is reasonably certain to exercise an option not
previously included in the determination of lease term. A revision in lease term results in remeasurement of the lease
liabilities. See accounting policy on reassessment of lease liabilities.
Right-of-use (“ROU”) assets
(a) initial measurement of roU assets
ROU assets are initially measured at cost comprising the following:

• The amount of the initial measurement of lease liability;
• Any lease payments made at or before commencement date less any lease incentive received;
• Any initial direct costs; and
• Decommissioning or restoration costs.
(b) subsequent measurement of roU assets

ROU assets that are not investment properties are subsequently measured at cost, less accumulated depreciation
and impairment loss (if any). The ROU assets are generally depreciated over the shorter of the asset’s useful life
and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option,
the ROU asset is depreciated over the underlying asset’s useful life. In addition, the ROU assets are adjusted
for certain remeasurements of the lease liabilities. ROU assets are presented as a separate line in the statement
of financial position.
Lease liabilities

(a) initial measurement of lease liabilities
Lease liabilities are initially measured at the present value of the lease payments that are not paid at that date. Lease
payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,
the lessee’s incremental borrowing is used. This is the rate that the individual lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value to the ROU in a similar economic environment with similar
terms, security and conditions.