Property, plant and equipment comprise the following assets:
- maintained for the purpose of their utilisation in production processes or in the delivery of goods or the provision of services, for the purpose of making them available for use to other entities under rental agreements, or for administrative purposes, and
- expected to be used for periods longer than one year.
Property, plant and equipment are valued at the net value, i.e. the initial value (or at the cost assumed for non-current assets used before the date of transition to IFRSs) less depreciation and impairment write-downs. The initial value of property, plant and equipment includes their purchase price plus all costs related directly to their purchase and adjustment to the condition making them available for use. Such costs include also the expected costs of the decommissioning of property, plant and equipment, their disposal, and the restoration of a particular location of a given asset to its original condition. The obligation to incur such costs occurs at the time of the installation of an asset or its usage for purposes other than the manufacture of inventories. As at the time of purchasing or manufacturing a component of property, plant and equipment, the Group identifies and distinguishes all their constituents significant in view of the purchase price or manufacturing cost of the whole asset and depreciates each such a constituent separately. The Group also recognises the costs of general overhauls and periodic maintenance inspections as an element of a component of property, plant and equipment.
The basis for calculating depreciation charges is a purchase price/manufacturing cost of a component of property, plant and equipment less its residual value. Depreciation starts when an asset is available for use. Depreciation of property, plant and equipment takes place on the basis of a depreciation plan specifying the expected economic useful life of a component of property, plant and equipment. The applied depreciation method reflects the process of the Group’s consuming the economic benefits related to a given asset. General overhauls and periodic maintenance inspections constituting components of property, plant and equipment assets are depreciated for the period from the month following the end of an overhaul/inspection to the month in which the next overhaul/inspection starts.
For the particular groups of property, plant and equipment, the following ranges of economic useful lives are used:
|Group of assets
||Average remaining depreciation period in years
Most frequently applied depreciation periods in years
|Buildings, premises and civil engineering structures
||20 – 60
|Machinery and technical equipment
||4 – 40
|Means of transport
||4 – 14
|Other property, plant and equipment
||5 – 10
The method of depreciation, rates of depreciation and residual values of property, plant and equipment are reviewed annually. All changes resulting from conducted reviews are recognised as changes in estimates and possible adjustments of depreciation charges are made in the year in which a review is made and in the subsequent periods.
Property, plant and equipment under construction are assets in the course of being constructed or assembled; they are recognised at their acquisition prices or manufacturing costs less possible impairment write-downs. Property, plant and equipment under construction are not depreciated until construction is completed and the item of property, plant and equipment is brought into use.