Property, plant and equipment are recognised at purchase price/generation cost less depreciation and impairment losses. The initial value of property, plant and equipment includes their purchase price increased for costs directly related to the purchase and the adjustment of a given asset to usable condition. Costs also include the cost of spare parts replacement in plant and machinery at the moment of cost incurrence, provided that the recognition criteria have been met. The costs incurred after the date of the commissioning of a given component of property, plant and equipment, such as the current costs of maintenance and repair works, are recognised in profit or loss at the moment of their incurrence. Property, plant and equipment, at the moment of their purchase, are divided into individual components constituting items of significant value to which separate useful lives can be assigned. Each time, when making overhauls, their costs are reported in the carrying amount of property, plant and equipment, if the recognition criteria are met, and are recognised in the next planned periodical repairs.
Depreciation is calculated with the application of the straight-line method for the estimated useful life of a given asset which amounts to:
| Type | Period |
|---|---|
| Buildings and structures | 25 – 100 years |
| Plant and machinery, including: | 10 – 40 years |
| crucial components | 15 – 25 years |
| Means of transport | 5-10 years |
| Other property, plant and equipment | 5-10 years |
A given item of property, plant and equipment can be derecognised from the balance sheet after having been sold or in the case when no economic benefits are expected to occur as a result of further utilisation of such an asset. Any gains or losses resulting from the derecognition of a given asset from the balance sheet (calculated as a difference between the potential net proceeds from sales and the carrying amount of the item) are recognised in profit or loss for the period in which such derecognition took place.
Property, plant and equipment under construction are assets currently under construction or assembly and are disclosed at purchase prices or generation costs. Property, plant and equipment under construction are not depreciated until the termination of the construction, i.e. only at the time when they become available for use.
The final value, the useful life and the depreciation method for the assets are reviewed on an annual basis and, if necessary, adjusted effective from the beginning of the next financial year.
