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3.3 Property, plant and equipment
Accounting policies
Property, plant and equipment mainly comprise land, buildings, machinery and equipment. Property, plant and equipment are carried at historic cost net of planned depreciation and possible impairment. The property, plant and equipment of acquired subsidiaries are measured at fair value at the date of acquisition.
Subsequent costs relating to items of property, plant and equipment are included in the asset’s carrying amount or recognised as a separate asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. The machinery and equipment of buildings are treated as separate assets and any significant expenditure related to their replacement is capitalised. All other repair, service and maintenance expenditures of items of property, plant and equipment are charged to the income statement during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-line method over their estimated useful lives. Land is not depreciated.
The most common estimated useful lives are:
Buildings 10−33 years
Components of buildings 8−10 years
Machinery and equipment 3−8 years
Cars and transport equipment 5 years
The residual values and useful lives of property, plant and equipment are reviewed at least at the end of each financial year. If the estimates of useful life and the expected pattern of economic benefits are different from previous estimates, the change in the estimate is accounted for.
Depreciation of property, plant and equipment ceases when an item is classified as a non-current asset held for sale.
Gains and losses on disposals of property, plant and equipment are recognised in the income statement and stated as other operating income and expenses.
The Group has not capitalised interest costs incurred as part of the acquisition of assets, because the Group does not have qualifying assets.
2017
€ million
Land and waters Buildings Machinery and equipment Other
tangible
assets
Prepayments and construction in progress Total
2017
Cost
Cost as at 1 January 302.8 1,058.9 530.7 58.4 101.1 2,052.0
Exchange differences -5.4 -15.2 -4.1 -2.8 -0.4 -27.9
Additions 13.0 185.6 75.1 4.3 29.3 307.4
Acquisitions 2.8 8.6 0.0 0.0 11.4
Deductions -0.8 -6.1 -75.4 -0.3 -6.4 -89.0
Disposals -1.2 -12.9 -12.5 -0.1 -0.1 -26.8
Transfers between items 2.5 60.2 7.0 0.9 -73.6 -3.0
Cost as at 31 December 313.7 1,279.2 520.8 60.4 50.0 2,224.0
Accumulated depreciation and impairment charges
Accumulated depreciation and impairment charges as at 1 January -6.1 -485.6 -378.7 -31.2 -901.6
Exchange differences 0.0 5.9 2.9 1.4 10.2
Accumulated depreciation and impairment charges on disposals -1.1 7.5 9.0 0.1 15.6
Accumulated depreciation on deductions 0.3 4.8 50.3 0.2 55.6
Accumulated depreciation on transfers 0.0 0.1 0.0 0.1
Depreciation and impairment charges for the year 0.0 -50.4 -55.5 -4.9 -110.7
Accumulated depreciation and impairment charges as at 31 December -7.0 -517.8 -371.9 -34.3 -931.0
Carrying amount as at 1 January 296.6 573.3 152.0 27.2 101.1 1,150.4
Carrying amount as at 31 December 306.8 761.4 148.9 26.0 50.0 1,293.1
2016
€ million
Land and waters Buildings Machinery and equipment Other
tangible
assets
Prepayments and construction in progress Total
2016
Cost
Cost as at 1 January 357.2 1,184.2 508.5 83.3 71.1 2,204.4
Exchange differences 0.9 4.2 7.0 1.0 0.2 13.3
Additions 13.5 68.4 58.3 5.8 86.2 232.2
Acquisitions 1.4 11.2 44.9 0.2 1.7 59.4
Deductions -2.4 -19.9 -55.3 -0.4 -0.7 -78.6
Disposals -52.1 -180.8 -34.4 -26.1 -2.7 -296.0
Transfers between items -15.7 -8.6 1.7 -5.5 -54.8 -82.7
Cost as at 31 December 302.8 1,058.9 530.7 58.4 101.1 2,052.0
Accumulated depreciation and impairment charges
Accumulated depreciation and impairment charges as at 1 January -11.7 -486.1 -391.3 -33.1 -922.3
Exchange differences -1.4 -2.9 -0.5 -4.8
Accumulated depreciation and impairment charges on disposals 9.6 40.8 15.8 4.3 70.4
Accumulated depreciation on deductions 11.4 44.9 -0.2 56.1
Accumulated depreciation on transfers 25.9 3.6 5.2 34.8
Depreciation and impairment charges for the year -4.0 -76.1 -48.8 -6.9 -135.8
Accumulated depreciation and impairment charges as at 31 December -6.1 -485.6 -378.7 -31.2 -901.6
Carrying amount as at 1 January 345.5 698.1 117.2 50.2 71.1 1,282.1
Carrying amount as at 31 December 296.6 573.3 152.0 27.2 101.1 1,150.4
Property, plant and equipment include the following amounts of machinery and equipment leased under finance leases:
€ million 2017 2016
Cost 28.5 23.4
Accumulated depreciation -18.3 -15.3
Carrying amount 10.2 8.1