ANNUAL REPORT 2008 - Gorenje Group

88
2008
tributable to bringing the asset to a working condition for its intended use, and the costs of dismantling
and removing the items and restoring the site on which they are located.
Borrowing costs related to the construction of property are recognised in profit or loss as incurred.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items of property, plant and equipment.
Fair value model or revaluation model is applied to land. Revaluation effects are recorded through
equity. Impairment loss of land whose value had previously been increased is directly charged
against revaluation surplus in equity, or else it is recognised in profit or loss. The revaluation of land
is based on an independent appraisal report. The requirement for revaluation of land is reassessed
annually by the Group.
.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 fair value 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 its cost until construction or development is complete,
at which time it is reclassified as investment property. Any gain or loss arising on re-measurement
to fair value is recognised in profit or loss.
(ii) Subsequent costs
The cost of replacing 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 Group and its cost can be measured reliably. The carrying amount of the replaced
part is derecognised. All other costs (such as the day-to-day servicing of property, plant and equipment)
are recognised in profit or loss as incurred.
(iv) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of each part of an item of property, plant and equipment. Leased assets are depreciated over the
shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
buildings
plant and equipment
computer equipment
transportation vehicles
office equipment
tools
20-50 years
5-10 years
2-5 years
3-10 years
3-10 years
3-10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
(e) Intangible assets
(i) Goodwill
Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates and joint ventures.