Ardagh Glass Finance plc - Irish Stock Exchange

ACCOUNTING POLICIES (Continued)
benefits embodied with the item will flow to the Group and the cost of the item can be measured
reliably. All other costs are recognised in the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated
useful lives are as follows:
Buildings ..........................................................
Plant and machinery ..................................................
Long life moulds ....................................................
Office equipment and vehicles ..........................................
The residual value, if not insignificant, is reassessed annually.
40 years
3–12 years
2 or 3 years
3–10 years
MOULDS
Moulds are classified into long-life moulds, which are included in property, plant and equipment
and depreciated over 2 or 3 years, and short-life moulds, which are included in inventories and are
valued at the lower of cost and net realisable value.
IMPAIRMENT
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date.
(i) Calculation of recoverable amount
The recoverable amount of the Group’s receivables carried at amortised cost is calculated as the
present value of estimated future cash flows, discounted at the original effective interest rate (i.e., the
effective interest rate computed at initial recognition of these financial assets). Receivables with a short
duration (less than one year) are not discounted.
The recoverable amount of other assets is the greater of their net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
(ii) Reversals of impairment
Reversals of impairments arise when indicators exist that suggest an impairment loss recognised in
a prior period no longer exists. An impairment loss in respect of goodwill can not be reversed. In
respect of other assets, an impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
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