PDF, 3.2 MB - Pfleiderer AG

Property, Plant and Equipment
Property, plant and equipment are reported at historical acquisition or production cost less
accumulated depreciation. Depreciation is recorded straight-line over the normal useful lives of
the assets for the business. In addition to direct material and production costs, the production
costs of assets constructed by the Company itself also include an appropriate portion of the allocable
material and production overheads and, if construction takes place over a longer period
of time, interest on borrowings from third parties during the construction period. Administrative
expenses are only capitalized if they are directly related to the construction process. Maintenance
and repair costs are recognized as expense.
Assets with a finite life are depreciated systematically straight-line pro rata temporis. For reason
of immateriality, low-value items of fixed assets costing individually less than 410 euros are
expensed in full in the year of acquisition in accordance with German accounting practice. Fixed
assets are retired from the balance sheet when they are sold or scrapped, and any gains or
losses are recognized as income or expense at that time.
Systematic depreciation is based on the following useful lives:
Buildings
Years
20–25
Technical equipment and machines 8–16
Other equipment, furniture and fixtures 3–11
Leasehold improvements and leased property, plant and equipment are depreciated over the
normal useful lives for the business or over the rental or lease period, whichever is shorter.
Government Subsidies and Grants
Provided the conditions relating to the investment have been fulfilled, government grants and
subsidies are deducted, when received, on the assets side of the balance sheet from the acquisition
and production cost of the subsidized investments.
Impairment of Long-Lived and Intangible Assets with a Finite Useful Life
Long-lived and intangible assets are tested for impairment whenever events or changed circumstances
indicate that the carrying amount of an asset may not be recoverable. If facts and
circumstances indicate that an asset has been impaired, the carrying amount of the asset is
compared to the future undiscounted cash flows expected to be generated. If necessary, a
write-down to the lower fair value is recognized. The fair value is based on the discounted cash
flows generated by the asset over its useful life.
Leases
Leasing transactions are classified either as capital leases or operating leases. Transactions that
meet one of the criteria of SFAS 13 (Accounting for Leases) are treated in the Group as capital
leases. In accordance therewith, the Group, as the lessee, has to recognize the leased asset and
the corresponding liability in its balance sheet.
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FINANCIAL STATEMENTS/NOTES PFLEIDERER GROUP