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Financial Reports &
Governance HENGYUAN REFINING COMPANY BERHAD l ANNUAL REPORT 2023 103
Other Information

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.4 MAINTENANCE COSTS
Asset replacement costs incurred by the Company for major scheduled maintenance of the refinery are capitalised as part
of the refinery assets and depreciated on a straight-line basis over the period until the next major scheduled maintenance.
All other repairs and maintenance are charged to profit or loss in the financial period they are incurred.

2.5 INTANGIBLE ASSETS
Intangible assets comprise software costs that are acquired by the Company, which have finite useful lives, and are
measured at cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets are amortised from the date that they are available for use and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. Amortisation is based on the cost of an asset less its residual value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of the intangible assets.

The estimated useful lives of intangible assets are between 3 and 10 years. Amortisation methods, useful lives and residual
values are reviewed at the end of each reporting period and adjusted, if appropriate.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
2.6 LEASES
Accounting by lessee
Leases are recognised as right-of-use (“ROU”) asset and a corresponding liability at the date on which the leased asset is
available for use by the Company (i.e. the commencement date).
Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to
the lease and non-lease components based on their relative stand-alone prices.
Lease term
In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not to exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not to be terminated).
The Company reassess the lease term upon the occurrence of a significant event or change in circumstances that is within
the control of the Company and affects whether the Company is reasonably certain to exercise an option not previously
included in the determination of the lease term. A revision in lease term results in remeasurement of the lease liabilities.
See accounting policy on reassessment of lease liabilities.