30 June 2014 Notes to the Financial Statements Leased assets Subsequent costs Revaluation Sale of non current assets LEASES Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a  straight-line basis over the term of the lease. Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of  the asset’s useful life and the lease term if there is no reasonable certainty that the Consolidated Entity will obtain  ownership at the end of the lease term. Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets,  or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal  component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining  balance of the liability. A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially  all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor  effectively retains substantially all such risks and benefits. The determination of whether an arrangement is or contains a lease is based on the substance of the  arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use  of a specific asset or assets and the arrangement conveys a right to use the asset. The net gain or loss on disposal is included in the statement of profit or loss and other comprehensive income at  the date control of the asset passes to the buyer, usually when an unconditional contract for sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time  of disposal and the net proceeds on disposal (including incidental costs). Increases in the carrying amount arising on the revaluation of plant and equipment are credited to a revaluation  reserve in equity. Decreases that offset previous increases of the same asset are charged against fair value  reserves directly in equity; all other decreases are charged to the statement of profit or loss and other  comprehensive income.  The Consolidated Entity recognises in the carrying amount of an item of plant and equipment the cost of replacing  part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within  the item will flow to the Consolidated Entity and the cost of the item can be measured reliably. All other costs are  recognised in the statement of profit or loss and other comprehensive income as an expense as incurred. The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each  reporting date. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and  equipment over their expected useful lives as follows: Leases in terms of which the Consolidated Entity assumes substantially all of the risks and rewards of ownership  are classified as finance leases. Finance leases are stated at an amount equal to the lower of fair value and  the present value of minimum lease payment at inception of the lease, less accumulated depreciation and  impairment losses. Notes to the  Financial  Statements Mineral Resources Limited Annual Report 2014  57 For personal use only Building Plant and equipment financed Plant and equipment Tracked plant and equipment  40 years 3 - 8 years or the term of the lease 1 - 10 years or usage basis 4 - 5 years or usage basis