PUMPKIN PATCH LIMITED & SUBSIDIARIES STATEMENT OF ACCOUNTING POLICIES FOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)
The cost of assets constructed by the Group includes the cost of all materials used in construction, direct labour on the project and financing costs that are directly attributable to the project. Costs cease to be capitalised as soon as the asset is ready for productive use.
Depreciation on property, plant and equipment, other than freehold land, has been calculated on a straight line basis so as to expense the cost of the assets to their residual values over their useful lives as follows:
Shop fit out
Point of sale equipment
Computer equipment & software
Plant and machinery
Furniture and fittings
Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are charged to the statements of financial performance in the periods in which they are incurred. Landlord contributions to fit-out costs are recognised in the statement of financial performance over the minimum period of the lease, as a reduction in operating lease costs.
Investments are stated at the lower of cost or net realisable value.
The excess of cost over the fair value of the net assets of the subsidiary entities is recognised as goodwill and is amortised to the statements of financial performance on a straight line basis over the shorter of its estimated life or five years.
Other intangibles comprise of the cost of registering trademarks. These are amortised over their anticipated useful lives which range between 5 and 10 years.
Raw materials and finished goods are stated at the lower of average weighted cost and net realisable value. Cost is determined on a first in, first out basis.
Accounts receivable are carried at estimated realisable value after providing against debts where collection is doubtful.