Annual report 2010 - plazacenters

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f. Normal operating cycle
The Group is involved in projects, some of which may take up to eight years to complete from the asset acquisition date. The cost of
trading property, loans and related derivatives which financed the development projects is presented as current assets and liabilities
(refer to note 10).
g. Investment property
Investment properties comprise investment interests in land and buildings (including integral plant and equipment) held for the purpose
of letting to produce rental income. Initially, investment properties are measured at cost including transaction costs. Subsequent to initial
recognition, the investment properties are then stated at fair value. Gains and losses arising from changes in the fair values of investment
properties are included in the Income statement in the period in which they arise.
The carrying amount of investment properties recorded in the Statement of Financial Position includes components relating to existing
lease incentives, and assets relating to fixed increases in operating lease rentals in future periods.
As the fair value method has been adopted for investment properties, the buildings and any component thereof (including plant and
equipment) are not depreciated. Refer to note 4 for the key assumptions in respect of valuations of investment property.
h. Property and equipment
Items of property and equipment are stated at cost less accumulated depreciation (see below) and accumulated impairment losses
(refer to accounting policy 3(i)). Cost includes expenditure that is directly attributable to the acquisition of the asset. Where parts of
an item of property and equipment have different useful lives, they are accounted for as separate items of property and equipment.
Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the
carrying amount of property and equipment and are recognized net within other income or other expenses in the income statement.
Depreciation of items of property and equipment is charged to the income statement over their estimated useful lives, using the
straight-line method, on the following rates:
%
Land – owned 0
Office buildings 2 – 4
Mechanical systems in the buildings 7 – 10
Aircrafts 5
Other* 6 – 33
* Consists mainly of motor vehicles, office furniture and equipment, computers, peripheral equipment, etc.
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
i. Impairment
1. Financial assets
A financial asset that is not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is
any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more
events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows discounted at the original effective interest rate (i.e. the effective
interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics. All impairment losses are recognized in profit or loss.
Plaza Centers N.V. Annual report 201081