Page 198 - Bank-Muamalat-AR2020

196 BANK MUAMALAT MALAYSIA BERHAD About Us Our Leadership Our Strategy
ANNUAL REPORT FY2020

Notes to the fiNaNcial statemeNts
31 December 2020 (16 JamaDil awal 1442h)

2. SIGNIFICANT ACCOuNTING POLICIES (CONT’D.)
2.3 Summary of significant accounting policies (cont’d.)

(h) Property, plant and equipment (cont’d.)
Depreciation of other property, plant and equipment is provided for on a straight-line basis over the estimated
useful lives of the assets as follows:
Buildings on freehold land 33 years
Buildings on leasehold land and leasehold land 33 years or remaining life of the lease, whichever is shorter
Office furniture and equipment 6 to 7 years
Buildings improvements and renovations 5 years
Motor vehicles 5 years
Computer equipment 3 to 5 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying
amount is recognised in statements of profit or loss.
(i) Leases

(a) Classification
At inception of a contract, the Group and the Bank assesses whether a contract is, or contains, a lease
arrangement based on whether the contract that conveys to the user (the lessee) the right to control the use of
an identified asset for a period of time in exchange for consideration.

(b) recognition and initial measurement
(i) The Group and the Bank as lessee

The Group and the Bank applies a single recognition and measurement approach for all leases, except
for short-term leases and leases of low-value assets. The Group and the Bank recognises lease liabilities
to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use (“ROU”) asset

The Group and the Bank recognises right-of-use assets at the commencement date of the lease (i.e., the date
the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurementof lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received.Right-of-
use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful life of the assets, as follows:
Office building 2 to 3 years
If ownership of the leased asset is transferred to the Group and the Bank at the end of the lease term or
the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful
life of the asset.

The right-of-use assets are also subject to impairment in accordance with Note 2.3(l) on impairment of
non-financial assets.