ACCIONA, S.A. AND SUBSIDIARIES (Consolidated Group ...

These assets are valued at the costs directly allocable to construction until they come into service
(studies and designs, compulsory purchases, reinstatement of services, project execution, project
management and administration expenses, installations and facilities and similar items) and the
portion relating to other indirectly allocable costs, to the extent that they relate to the construction
period. Also included under this heading are the borrowing costs incurred prior to the entry into
operation of the assets arising from the external financing thereof. Capitalised borrowing costs
arise from specific borrowings expressly used for the acquisition of an asset.
J) Inventories
The Group companies measure their inventories as follows:
- In the Construction business, procurements, consisting basically of construction materials
located at the sites of the various construction projects in progress, are measured at
acquisition cost. Semi-finished goods or work in progress to be included in the value of the
construction projects are recognised at production cost.
Land is measured at the lower of acquisition cost, plus urban development costs, if any,
purchase transaction costs and borrowing costs incurred from the date of commencement of
the development of the site for its desired use until construction begins, and estimated market
value. If the building work is halted due to its rescheduling or other reasons, the borrowing
costs cease to be capitalised.
The costs incurred in property developments (or in parts of a development) unfinished at
year-end are treated as inventories. These costs include land, urban development and
construction costs, capitalised borrowing costs incurred in the construction period, and other
allocable direct and indirect costs. Commercial costs are charged to the income statement in
the year in which they are incurred.
The borrowing costs capitalised in 2011 and 2010 amounted to EUR 1 million and EUR 2
million, respectively (see Note 29).
- Other inventories are recognised generally at the lower of weighted average cost and net
realisable value. Goods held for resale can, on a residual basis, be measured at FIFO cost.
Property inventories
The Group assesses the fair value of the inventories at the end of each year based on the appraisals
undertaken by independent valuers, and recognises the appropriate write-down if the inventories
are overstated. The Acciona Group calculated the fair value of its property developments based on
the appraisals conducted at 31 December 2011 by its independent valuers (SAVILLS).
The appraisal was carried out in accordance with the Appraisal and Valuation Standards issued by
the Royal Institute of Chartered Surveyors (RICS) of the United Kingdom and the International
Valuation Standards (IVS) issued by the International Valuation Standards Committee (IVSC).
The residual method was used to calculate the fair value, supplemented by the comparative
method. This value constitutes the best estimate of the market value of these assets.
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