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Wavin Annual Report 2010 | page 84(e) Property, plant & equipment(i) Owned assetsAll items of property, plant & equipment are stated at cost less cost reducing subsidies received from the government (seenote 3 (s)), accumulated depreciation (see section (iv) Depreciation) and impairment losses (see note 3 (l)). Costs includeexpenditures that are directly attributable to the acquisition of the asset, including capitalised borrowing costs for qualifyingassets.Property that is being constructed or developed for future use as investment property is classifi ed under property, plant &equipment in progress and stated at cost until construction or development is completed, at which time it is reclassifi ed asinvestment property. Assets which have been ordered but for which no invoices have been received yet, are disclosed undercapital commitments.Where an item of property, plant & equipment comprises major components that have different useful lives, they areaccounted for as separate items of property, plant & equipment. The cost of replacing a component of an item of property,plant & equipment is recognised in the carrying amount of the item if it is probable that the future economic benefi tsembodied within the component will fl ow to the Group, and its cost can be measured reliably. Where possible the carryingamount of the replaced component is derecognised. Day to day maintenance costs of property, plant & equipment areexpensed in the period in which they occur.Gains and losses on the sale of property, plant & equipment are included in the income statement as other income. If there isan indication that an asset may be impaired, the recoverable amount of the asset is estimated. If the carrying value exceedsthe recoverable amount, an impairment charge is recognised in the income statement.(ii) Leased assetsLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nanceleases. Plant and equipment acquired by way of fi nance lease is stated at an amount equal to the lower of its fair value andthe present value of the minimum lease payments at inception of the lease, less accumulated depreciation (see section (iv)Depreciation) and impairment losses. Other leases are operating leases which are not recognised in the balance sheet andare recognised in the income statement as an expense as incurred.(iii) Subsequent expenditureThe cost of replacing part of an item of property, plant & equipment is capitalised as a separate asset when it is probable thatthe future economic benefi ts embodied within the part will fl ow to the Group and its costs can be measured reliably. Thecarrying amount of the replaced part is derecognised. Other subsequent expenditure is capitalised only when it increases thefuture economic benefi ts embodied in the item of property, plant & equipment. All other expenditure is recognised in theincome statement as an expense as incurred.(iv) DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful lives of items of property,plant & equipment, and major components that are accounted for separately. Land is not depreciated as it is deemed to havean indefi nite life. Assets under construction are not depreciated. The rates for depreciation are:Surfaces 10%Buildings 2.5%Installations and production machinery 5 to 15%Heads, cones, moulds 10 to 12.5%Transport equipment 20%Computer hardware 20 to 33.33%Offi ce equipment/furniture 10%The residual value, useful lives and depreciation methods are reassessed annually.(f) Intangible assets(i) GoodwillGoodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill atinitial recognition we refer to note 2b.Goodwill is stated at cost less accumulated impairment charges (see note 3 (l)). Goodwill is not amortised but tested annuallyfor impairment. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investmentin the associate.