Property, plant and equipment is initially recorded at historical cost, being the purchase cost plus any cost to prepare the assets for their intended use. Historical cost includes expenditure that is directly attributable to the acquisition of the item. 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 Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the financial year in which they are incurred.
Property, plant and equipment is subsequently carried at historical cost less accumulated depreciation and any accumulated impairment losses.
Major leasehold improvements are amortised over the shorter of their respective lease periods and estimated useful lives.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at year-end. Where the assets’ residual value is higher than the carrying value, no depreciation is provided.
Gains and losses on disposal of property, plant and equipment are determined as the difference between the carrying amount and the fair value of the sale proceeds, and are included in operating profit.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. |