HKSI Institute AR2023

59 HKSI Institute Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) (Expressed in Hong Kong dollars unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has the right to, variable returns from its involvement with the entity and has the ability to affect those returns by its power over the entity. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered. Investments in subsidiaries are consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances, transactions and cash flows and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment. In the Institute’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses (see note 2(j)), unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale). (d) Property, plant and equipment Property, plant and equipment, including right-of-use assets arising from leases of underlying property, plant and equipment (see note 2(g)), are stated at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives as follows: – Leasehold improvements Over the term of lease – Computer equipment 3 years – Office equipment, furniture and fixtures 5 years – Right-of-use assets Over the term of lease Both the useful life of an asset and its residual value, if any, are reviewed annually. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in the consolidated statement of profit or loss and other comprehensive income on the date of retirement or disposal. Grants that compensate the group for the cost of property, plant and equipment are deducted from the carrying amount of property, plant and equipment (see note 2(p)).