Panalpina Annual Report 2006

Consolidated and Annual Financial Statements 2006
80 Panalpina Annual Report 2006
Trade receivables
Accounts receivable from third parties represent invoiced amounts less valuation adjustments for impairments. A provision
for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of receivables. The amount of the provision is the difference between the
asset’s carrying amount and the present value of estimated future cash flows. The change of the provision is recognized in
the income statement within other operating expenses.
Unbilled forwarding services
Unbilled forwarding services represents the deferred expenses and accrued income gross amount due from customers
for forwarding services in progress for which costs incurred exceed progress billings or services are not yet rendered. For
logistics projects and other services with a longer period of delivery, recognized profits are included.
Property, plant and equipment
Property, plant and equipment are stated at cost including expenditures that are directly attributable to the acquisition of
the items, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment in
value. Such costs include the cost of replacing part of the property, plant and equipment when that cost is incurred, if the
recognition criteria are met.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and if the cost of the item can
be measured reliably.
Land and buildings are measured at fair value less depreciation on buildings and impairments charged subsequent to the
date of the revaluation. Depreciation is calculated on a straight line method to allocate their costs over their estimated useful
lives, as follows:
Warehouse and office buildings
Years
25 – 40
Warehouse and transportation equipment 3 – 10
Office furnishings and equipment 5 – 10
EDP hardware 3
Trucks, trailers and special vehicles 3 – 10
Automobiles 3 – 5
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset, calculated as the difference between the
net disposal proceeds and the carrying amount of the asset, is included in the income statement in the year the asset is
derecognized.
The asset’s residual values, useful life and method of depreciation are reviewed and adjusted if appropriate, at each financial
year-end.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at
inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following
applies:
• there is a change in contractual terms, other than a renewal or extension of the arrangement;
• a renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the
lease term;
• there is a change in the determination of whether fulfillment is dependent on a specified asset; or
there is a substantial change to the asset.