10
2.12.4 Other fixed assets are depreciated on a straight-line basis over their estimated useful
lives as follows: - Plant and machinery
5 - 15 years Computer hardware and office equipment
1 - 10 years Furniture and fittings
1 - 10 years The estimated useful lives of these fixed assets are assessed on a periodic basis to ensure that
they continue to be appropriate.
Fixed assets are periodically reviewed for impairment. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable
amount. Gains and losses on disposal of fixed assets are determined by reference to their carrying amount and are taken into account in determining operating profit.
2.13 TREASURY RELATED OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The accounting treatment applied to treasury related off-balance sheet financial instruments, including forwards, swaps, futures and options, is based upon the intention for entering into the
transactions as elaborated below.
2.13.1 NON-TRADING TRANSACTIONS
Derivatives may be used to hedge interest rate, exchange rate or other price exposures that are inherent in the assets and liabilities of DBS Bank.
The criteria required for a derivative instrument to be classified as a designated hedge are: i
the derivative instrument must be reasonably expected to match or eliminate a significant proportion of the risk inherent in the assets, liabilities, other positions or cashflows being
hedged; and
ii there is adequate evidence of the intention to hedge. Linkage with the underlying risk
inherent in the assets, liabilities, other positions or cashflows being hedged, must be established at the outset of the transaction.
Profits and losses on derivatives entered into for specifically designated hedging purposes against assets, liabilities, other positions or cashflows measured on an accrual accounting basis
are included in the related category of income or expense in the profit and loss account on the same basis as that arising from the underlying hedging transactions.
Hedging transactions, which have been superseded, cease to be effective or are terminated prior to the end of the life of the assets, liabilities, other positions or cashflows being hedged, are
measured at fair value. Any profit or loss arising from the fair value measurement is deferred and amortised as interest income or expense in the profit and loss account over the remaining
life of the items previously being hedged.
When the underlying assets, liabilities, other positions or cashflows are terminated prior to the hedging transactions, or anticipated transactions are no longer likely to occur, the hedging
transactions are measured at fair value prior to being transferred to the trading portfolio. The
11 profit or loss arising from the fair value measurement prior to the transfer to the trading portfolio
is included in the category of income and expense in the profit and loss account relating to the previously hedged transactions.
2.13.2 TRADING TRANSACTIONS
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