j- Fixed assets, net Fixed assets are recorded at actual cost and are depreciated using the straight-line method to allocate the costs of the related assets over the estimated useful lives using the following depreciation rates:
Assets Depreciation Percentage
Buildings and improvements
From 5 to 33.3%
Fleet and equipment *
From 4 to 15%
Containers and trailers
From 8.33 to 20%
Furniture and fixtures
10%
Tools and office equipment
From 2.5 to 25% From 20 to 25% From 15 to 25% From 10 to 25%
Motor vehicles
Computers equipment
Container yard
Others
From 7 to 15%
* RoRo’ vessels are depreciated over a period of twenty years, while VLCCs are depreciated over a period of twenty-five years. Used vessels are depreciated based on their estimated remaining useful lives, after taking into consideration 10% of the vessels’ cost as residual value. RoRos’ equipment are depreciated over a period of fifteen years.
k- Impairment of non-current assets Non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset’s fair value less cost to sell and value in use. For the purpose of assessing impairment, assets are grouped at lowest levels for which there are separately identifiable cash flows (cash- generating units). Non-current assets other than intangible assets that suffered impairment are reviewed for possible reversal of impairment at each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but the increased carrying amount should not exceed the carrying amount that would have been determined, had no impairment loss been recognized for the assets or cash-generating unit in prior years. A reversal of an impairment loss is recognized as income immediately in the income statement. Impairment losses recognized on intangible assets are not reversible. l- Employees’ end of service benefits provision Employees’ end of service benefits provision is provided for on the basis of accumulated services period in accordance with the By-Laws of the Company and in conformity with the Saudi Labor Law. End of service benefits in respect of subsidiaries outside the Kingdom of Saudi Arabia are provided for based on the applicable regulations applied to these subsidiaries. m- Revenue recognition The Company adopted the completed voyage policy to determine the revenues and expenses for the period of the voyages. A voyage is
The National Shipping Company of Saudi Arabia Annual Report 2010
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