Page 45 - SIGA Annual Report 2014

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NOTES TO
THE FINANCIAL
STATEMENTS
YEAR ENDED
MARCH 31, 2014
45
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses, if any. Cost
includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property and equipment
have different useful lives, they are accounted for as separate items (major components) of property and equipment. Borrowing
costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are added to the costs of those assets. SIGA ceases to capitalize
borrowing costs when substantially all the activities necessary to prepare the qualifying asset for its intended use are complete.
Depreciation is recorded in the accounts on a straight-line basis commencing when they are available for use, at rates expected
to depreciate the cost of the assets over their estimated useful lives as follows:
Asset
Rate
Leasehold improvements
lesser of the useful life of the asset and term of the lease
Casino development
40 years
Furniture & equipment
4-5 years
Depreciation methods are reviewed at each financial year end and adjusted prospectively, if appropriate.
During the year, SIGA revised the estimated useful life of Casino Development assets to 40 years from its previous estimate
(between 16 and 20 years). Had the original depreciation rate been used, the depreciation expense in the current year would have
been $1,414,500 higher. The impact would be comparable to future years through the end of March 31, 2027.
When property and equipment are disposed of or retired, the related costs less accumulated depreciation are de-recognized. The
gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between
the sales proceeds less costs of removal and the carrying amount of the asset. The gain or loss on asset disposals and retirements
is recognized in other revenue or expenses.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost, less any accumulated amortization and
accumulated impairment losses, if any. SIGA’s only identifiable intangible asset is software. Software costs include the cost
of externally purchased software packages and, for internally developed programs, related external and direct labour costs.
Maintenance of existing software programs is expensed as incurred.
Amortization is calculated on a straight-line basis over its estimated useful life of between 1 to 5 years. The amortization method
and estimated useful life is reviewed annually and any changes are applied prospectively.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to SIGA. All other leases are classified as operating leases.
Assets held under a finance lease are initially recognized as assets of SIGA and are recorded at their fair value at the inception
of the lease, or if lower, at the present value of the future minimum lease payments. The corresponding liability to the lessor is
included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between interest expense and a reduction of the lease obligation so as to achieve a constant rate
of interest on the remaining balance of the liabilities. The interest component is recognized in finance costs in the statement of
comprehensive income.
Operating lease payments are recognized as an expense on a straight-line basis over the lease term.