Page 66 - Honeywell Annual Report 2021 comm 10 09 v17a.cdr

Notes to the Financial Statements

For the Year Ended 31 March, 2021cont’d

3.5 Changes in Significant Accounting Policies

There are no new or amended applicable standards that became effective or adopted by the company during the
year, hence, there are no changes in the accounting policies applied during the year.

3.6 Property, Plant and Equipment
Property, plant and equipment are tangible assets which the company holds for its own use or for rental to

others and which are expected to be used for more than one year.

An item of property, plant and equipment is recognised as an asset when it is probable that future economic
benefits associated with the item will flow to the company, and the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost. Cost includes all of the expenditure which is directly
attributable to the acquisition or construction of the asset, including the capitalisation of borrowing costs on
qualifying assets and adjustments in respect of hedge accounting, where appropriate.
Expenditure incurred subsequently for major services, additions to or replacements of parts of property, plant and
equipment are capitalised if it is probable that future economic benefits associated with the expenditure will flow to the
company and the cost can be measured reliably. Day to day servicing costs are included in profit or loss in the
year in which they are incurred.

Major spare parts and stand by equipment which are expected to be used for more than one year are included in
property, plant and equipment.

Subsequent to initial recognition, property, plant and equipment is measured at cost less accumulated depreciation
and any accumulated impairment losses, except for land and buildings which are stated at revalued amounts. The
revalued amount is the fair value at the date of revaluation less any subsequent accumulated depreciation and
impairment losses.
Property, plant and equipment is subsequently stated at revalued amount, being the fair value at the date of
revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Revaluations are made within 3 to 5 years such that the carrying amount does not differ materially from that
which would be determined using fair value at the end of the reporting year.
The fair value represents the price which an interested party in a property or an item of plant and machinery might
reasonably be expected to realize in a sale by private treaty assuming the following:
Ÿ a willing buyer;

Ÿ a reasonable period within which to negotiate the sale taking into consideration the nature of the assets and
the state of the market;

Ÿ values will remain static throughout the period; - the assets will be freely exposed to the market;
Ÿ no account is to be taken of an additional bid by a special purchaser; and
Ÿ no account is to be taken of expenses of realization which may arise in the event of a disposal.

Any increase in an asset's carrying amount, as a result of a revaluation, is recognised in other comprehensive income
and accumulated in the revaluation reserve in equity. The increase is recognised in profit or loss to the extent that it
reverses a revaluation decrease of the same asset previously recognised in profit or loss.

Any decrease in an asset's carrying amount, as a result of a revaluation, is recognised in profit or loss in the current
year. The decrease is recognised in other comprehensive income to the extent of any credit balance existing in the
revaluation reserve in respect of that asset. The decrease recognised in other comprehensive income reduces the
amount accumulated in the revaluation reserve in equity.

66 HONEYWELL FLOUR MILLS | ANNUAL REPORT | 2021 World of Possibilities