Chrysler 2012 Annual Report Download - page 135

Notes
134 Consolidated
Financial
Statements
at 31 December
2012
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 3% - 8%
Plant, machinery and equipment 3% - 33%
Other assets 5% - 33%
Land is not depreciated.
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 assesses at the end of each reporting period whether there is any indication that its intangible assets (including development
costs) and its property, plant and equipment may be impaired. Goodwill and Intangible assets with indefinite useful lives are tested for
impairment annually or more frequently, if there is an indication that an asset may be impaired.
If indications of impairment are present, the carrying amount of the asset is reduced to its recoverable amount that is the higher of fair
value less costs to sell and its value in use. Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. In assessing the value in use of an asset,
the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. An impairment loss is recognised if the recoverable amount is lower than
the carrying amount.
Where an impairment loss for assets, other than goodwill subsequently no longer exists or has decreased, the carrying amount of the
asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but not in excess of the carrying amount
that would have been recorded had no impairment loss been recognised. The reversal of an impairment loss is recognised in profit or
loss immediately.