Annual Report 2010 - AdP

2.7 Tangible fixed assets
Tangible fixed assets are valued at cost, less all impairment losses, and depreciated in accordance with estimated useful life. Expenses
directly attributable to acquisition of the goods and their preparation for operation are considered at their balance sheet value.
A significant part of the tangible fixed assets of AdP Group (EPAL) acquired at 31 December 2008 are recorded at acquisition cost
or deemed cost, which includes the effects of revaluations conducted in accordance with legal provisions, as well as the effects of
free revaluations, on the basis of valuations conducted by an independent and specialized entity with reference to the transition
date (1 January 2009).
Subsequent costs are included in the book value of the asset or recognized as separate assets, whatever the case may be, only when
it is probable that economic benefits will ensue for the Company and the cost can be reliably measured. Depreciation of the assets
shall be conducted over the course of the remaining useful life of the asset or until their next repair, whichever occurs first. The
replaced component of the asset is identified and recorded under income/loss.
All other expenses related to repairs and maintenance are recorded as cost for the period in which they are incurred.
Depreciation of operational fixed assets is based on the estimated useful life as of the time they are ready to become operational.
The depreciable value is obtained by deducting the expected residual value at the end of the estimated useful life.
Below the percentages of the estimated useful lives for tangible fixed assets:
Nature Maximum annual rate
Buildings and other constructions 2.00%
Basic equipment 12.50%
Transportation equipment 25.00%
Tools and utensils 14.28%
Office equipment 14.28%
Land is not depreciated.
Depreciation of assets that are earmarked for sale shall be suspended and they shall become classified as held for sale.
Whenever there are indications of a loss of value in tangible fixed assets, impairment tests are conducted in order to estimate the
recoverable value of the asset and, when necessary, record a loss due to impairment. The recoverable value is calculated as the
higher value between the net sale price and the use value of the asset, the latter being calculated on the basis of the current value
of future estimated cash flow, resulting from continued use and from the sale of the asset at the end of its useful life.
At the end of each financial year, the Board of Directors shall review the depreciation methods and the estimated useful lives of
each asset in order to accurately reflect the patterns of consumption of the benefits of the assets during the years they are used by
AdP Group. Any changes in these criteria shall be considered an accounting estimate change and subject to prospective application.
Gains or losses ensuing from the write-off or sale shall be calculated on the basis of the difference between the revenue from the
sale and the book value of the asset and shall be recorded as income or cost in the income statement.
2.7.1 Financial leasing
Leasing of assets, over which AdP Group substantially holds all risks and benefits related to ownership of the asset, are classified as
financial leasing. Agreements in which the analysis of one or more particular situations of the contract points to this type of situation
shall also be classified as financial leasing. All other leases shall be classified as operating leases. Financial leasing is capitalized at the
start of the lease at the lower value between the fair value of the leased asset and the present value of the minimum leasing payments
- the responsibility recorded under other long-term liabilities, net of financial charges. Assets acquired through financial leasing are
depreciated by the lesser of either the useful life period of the asset or the term of the leasing agreement.
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