Chrysler 2011 Annual Report Download - page 145

Notes
144 Consolidated
Financial
Statements
at 31 December
2011
Property, plant and equipment
Cost
Property, plant and equipment are stated at acquisition or production cost.
Subsequent expenditures and the cost of replacing parts of an asset are capitalised only if they increase the future economic benefits
embodied in that asset. All other expenditures are expensed as incurred. When such replacement costs are capitalised, the carrying
amount of the parts that are replaced is recognised in the income statement.
Assets held under finance leases, which provide the Group with substantially all the risks and rewards of ownership, are recognised
as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability to
the lessor is included in the financial statements as a debt. The assets are depreciated by the method and at the rates indicated below.
Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are classified as operating leases.
Operating lease expenditures are expensed on a straight-line basis over the lease terms.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Depreciation rates
Buildings 2% - 10%
Plant, machinery and equipment 3% - 33%
Other assets 5% - 33%
Land is not depreciated.
Leased assets
Leased assets include vehicles leased to retail customers by the Group under operating lease arrangements. They are stated at cost
and depreciated at annual rates of between 7% and 20%.
When such assets cease to be rented and become held for sale, the Group reclassifies their carrying amount to Inventories.
Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets (as defined under IAS
23 – Borrowing Costs), which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,
are capitalised and amortised over the useful life of the class of assets to which they refer.
All other borrowing costs are expensed when incurred.
Impairment of assets
The Group reviews, at least annually, the recoverability of the carrying amount of intangible assets (including capitalised development
costs) and property, plant and equipment, in order to determine whether there is any indication that those assets have suffered
an impairment loss. Intangible assets with indefinite useful lives are tested for impairment annually or more frequently, if there is an
indication that the asset may be impaired.