2012 Annual Report - Italcementi Group

2012 Annual Report
Presentation 4
General information 14
Annual Report Consolidated Annual Report Directors’ report 30
Sustainability disclosure Italcementi S.p.A. Annual Report Consolidated financial statements 63
Extraordinary session 351
1.6. Property, plant and equipment
Recognition and measurement
Property, plant and equipment are recognized at cost, less accumulated depreciation and impairment losses.
Cost includes the purchase or production cost and the directly attributable costs of bringing the asset to the
location and the conditions required for its operation. Production cost includes the cost of materials and direct
labor costs. Finance costs relating to the purchase, construction and production of qualifying assets are
capitalized.
The carrying amount of some assets existing at the IFRS first-time adoption date of January 1, 2004, reflects
revaluations applied in prior periods in connection with specific local laws, based on the real economic value of
the assets in question. Assets acquired through business combinations are stated at fair value, determined on
a provisional basis at the acquisition date and subsequently adjusted within the following twelve months.
Subsequent to initial recognition, property, plant and equipment are carried at cost and depreciated over the
asset’s useful life, less any impairment losses.
Assets under construction are recognized at cost; depreciation begins when the assets enter useful life.
When an asset consists of components with a significant cost and different useful lives, initial recognition and
subsequent measurement are carried out separately for each component.
Subsequent expense
Repair and maintenance expense is normally recognized as incurred. Component replacement costs are
treated as separate assets and the net carrying amount of the replaced component is expensed.
Depreciation
Depreciation is generally calculated on a straight-line basis over the estimated useful life of each component of
an asset. Land is not depreciated, with the exception of land used for quarrying operations.
Asset useful life determines the depreciation rate until a subsequent review of residual useful life. The useful
life range adopted for the various categories of assets is disclosed in the notes.
Quarries
Costs for the preparation and excavation of land to be quarried are amortized as the economic benefits of such
costs are obtained.
Quarry land is depreciated at rates reflecting the quantities extracted in the period in relation to the estimated
total to be extracted over the period in which the quarry is to be worked.
The Group makes specific provision for quarry environmental restoration obligations. Since the financial
resources required to settle such obligations are directly related to the degree of use, the charge cannot be
defined at inception with a balancing entry to the asset cost, but is provided to reflect the degree of use of the
quarry.
1.7. Leases
Finance leases, which substantially transfer to the Group all risks and rewards incidental to ownership of the
leased asset, are recognized from the lease inception date at the lower of the leased asset fair value or the
present value of the lease payments. Lease payments are apportioned between finance costs and reductions
against the residual liability so as to obtain a constant rate of interest on the outstanding liability.
The policies used for depreciation and subsequent measurement of leased assets are consistent with those
used for the Group’s own property, plant and equipment.
Leases where all risks and rewards incidental to ownership are retained by the lessor are classified as
operating leases.
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