Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

1.5 Property, plant and equipment
All property, plant and equipment are stated at historical cost less depreciation and – where necessary – write-downs for impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
All repairs and maintenance costs, as well as interest paid, are charged to the income statement during the financial period in which they
are incurred. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line method over its estimated useful life, as follows:
– Buildings 10–50 years
– Technical equipment and machinery (incl. special tools) 2–18 years
– Other equipment, operating and office equipment 3–15 years
Government grants related to purchase of tangible assets are deducted in order to arrive at the carrying amount of the relevant tangible
asset.
1.6 Impairment of assets
Assets that are subject to amortisation and depreciation 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).
1.7 Financial Assets
The Company classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and
receivables; held-to-maturity investments; available-for-sale financial assets; and shares in subsidiaries and associates. The classification
depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at
initial recognition and re-evaluates this designation at every reporting date.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as
held for trading unless they are designated as hedging instruments. Assets in this category are classified as current assets.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the receivable. They are
included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current
assets. Loans and receivables are classified as trade receivables, or other receivables and financial assets in the balance sheet (Note 7 and
Note 9).
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