2011 Annual Report - Italcementi Group

1.5 Translation of foreign currency items
The functional currency of the subsidiaries located outside the euro zone is usually the local currency.
Foreign currency transactions
Foreign currency transactions are initially translated to the functional currency using the exchange rate at the
transaction date. At the reporting date, foreign currency monetary assets and liabilities are translated to the
functional currency at the closing rate. Exchange rate gains and losses are taken to the income statement.
Non-monetary foreign currency assets and liabilities measured at cost are translated at the exchange rate
ruling at the transaction date; those measured at fair value are translated with the exchange rate at the date
fair value was determined.
Translation of the financial statements of foreign entities
At the reporting date, the assets, including goodwill, and liabilities of consolidated companies that report in
currencies other than the euro are translated to the presentation currency of the Group’s consolidated financial
statements at the exchange rate ruling at such date. Income statement items are translated at the average rate
for the period. Gains and losses arising from the translation of opening equity at the closing rates and those
arising from the different method used to translate profit or loss for the period are recognized in a specific
equity caption. In the event of subsequent disposal of a foreign entity, the cumulative translation differences
are taken to the income statement.
As allowed under IFRS 1, cumulative translation differences at the date of first-time adoption of the IFRS have
been reclassified in “Retained earnings” under equity and therefore will not be taken to the income statement in
the event of subsequent disposal.
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 carrying amount of the replaced component is expensed.
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