| l. | Property plant and equipment: |
| 1. | The Group’s hotel was presented in the consolidated balance sheets according to the revaluation model. |
Revaluations are carried out on a regular basis (generally each half year). A change in the value of the hotel resulting from revaluation or from exchange rate differences is attributable to other comprehensive income (any revaluation reserve is net of applicable deferred taxes).
The reserve derived from the revaluation of the hotel is transferred to retained earnings over the period for which the hotel is used by the Group. The transferred amounts equal the difference between the depreciation charge based on the revalued carrying amounts of the hotel and the depreciation charge based on the hotels’ original cost. When a revaluated hotel is sold, the remaining amount in the revaluation reserve with respect to the same hotel (including any tax expenses) is directly transferred to retained earnings.
Other property plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Improvements and renovations are charged to cost of assets. Maintenance and repair costs are charged to the statement of income as incurred.
| 2. | Depreciation is calculated by the straight-line method over the assets estimated useful lives. Leasehold improvements are amortized over the estimated useful period of use not exceeding the lease period (including the period of renewal options that the Group intends to exercise). |
Annual depreciation rates are as follows:
| % | |||
| Hotel | 5 | ||
| Other buildings | 2.0 - 2.5 | ||
| Building operating systems | 7.0 (average) | ||
| Others (*) | 6.0 - 33.0 |
| (*) | Consists mainly: office furniture, machinery and equipment, electronic equipment, computers and peripheral equipment. |