Annual Report Gorenje Group 2009

d) Property, plant and equipment (PPE)
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructed
assets includes the cost of materials and direct labour, any other costs directly attributable
to bringing the assets to a working condition for their intended use, the costs of dismantling and
removing the items and restoring the site on which they are located.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying item of
property, plant and equipment were capitalised subject to the following conditions: if the value of
qualifying asset in total sales exceeded 5%, and if the duration of construction exceeded 6 months.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Fair value model or revaluation model is applied to land. The effect of revaluation is recorded in other
comprehensive income. Impairment of land previously increased in value results in a decrease in
revaluation surplus in other comprehensive income; otherwise, it is recognised in the income
statement. The revaluation of land is based on the appraisal report prepared by an independent
appraiser. Each year, the Company is testing land for impairment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing
the proceeds from disposal with the carrying amount of property, plant and equipment, and are
recognised net within other operating income in profit or loss. When revalued assets are sold, the
amounts included in the revaluation reserve are transferred to retained earnings.
(ii) Reclassification to investment property
Property that is being constructed for future use as investment property is accounted for as property,
plant and equipment and measured at cost until construction of development is completed, at which
time it is reclassified as investment property. Any gain arising on remeasurement is recognised in profit
or loss.
(iii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will flow
to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is
derecognised. All others costs, such as day-to-day servicing of property, plant and equipment, are
recognised in profit or loss as incurred.
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Annual Report Gorenje Group 2009