Depreciation: Depreciation is provided for on all property, plant and equipment other than land over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives are as follows:

	Years
Building	20
Building improvements	5-10
Leasehold improvements	5
Machinery and equipment	5-15
Office furniture and equipment	5-15
Motor vehicles	5

The Group records depreciation as an expense in accordance with the above.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

When a fixed asset is retired, the Group will write-off both the asset amount and its related accumulated depreciation, and recognise any gain or loss from retirement of the asset.

Capital expenditures: Expenditures for addition, renewal and betterment, which result in a substantial increase in an asset's current replacement value, are capitalised. Repair and maintenance costs are recognised as expenses when incurred.

Foreign currency transactions

Foreign currency transactions during the year are accounted for at the exchange rates prevailing at the date of the transactions. Monetary assets and liabilities at the balance sheet date denominated in foreign currencies are translated into Thai Baht at the rates ruling at the balance sheet date. Gains or losses resulting from the settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currencies, are recognised as income or expenses when incurred.

Financial instruments

Financial instruments carried on the balance sheet include cash on hand and at banks, investments, trade accounts receivable, short-term loans to joint venture, trade accounts payable, other accounts payable and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

The Group uses financial instruments that reduces exposure to fluctuation in foreign currency exchange. The instrument is forward foreign exchange contracts. The purpose of the instrument is to reduce risk.

Forward foreign exchange contracts protect the Group from fluctuations in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Any increase or decrease in the amount required to settle the asset or liability is offset by a corresponding movement in the value of the forward foreign exchange contract. The gain and loss on the forward foreign exchange contract that is determined to be an effective hedge is recognised directly in shareholders' equity whereas the gain and loss on the forward foreign exchange contract, which is determined to be an ineffective hedge, is recognised directly in the statement of income.

During the year, the Group has adopted the captioned accounting policy but has not accounted for the adoption retrospectively since the effects of not restating for the forward foreign exchange contracts established in the prior years were not significant to the financial statements for those years.

Deferred income tax

The Group accounts for deferred income tax arising from temporary differences in the recognition of income and expenses between financial accounting and tax accounting, using the liability method, to the extent that the deferred tax asset or liability is expected to be reversed in the future.

Comparatives

The Group has implemented the following new Thai Accounting Standards, effective 1 January 2000, in the consolidated and company financial statements:

TAS 44 - Consolidated Financial Statements and Accounting for Investments in Subsidiaries

TAS 46 - Financial Reporting for Interests in Joint Ventures

TAS 47 - Related Party Disclosures

TAS 48 - Financial Instruments: Disclosure and Presentation

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