Mercedes 2008 Annual Report Download - page 157

Consolidated Financial Statements |Notes to Consolidated Financial Statements |153
Property, plant and equipment. Property, plant and equipment
are valued at acquisition or manufacturing costs less accumu-
lated depreciation. If necessary accumulated impairment losses
will be recognized. The costs of internally produced equipment
and facilities include all direct costs and allocable overheads.
Acquisition or manufacturing costs include the estimate of the
costs of dismantling and removing the item and restoring the site,
if any. Plant and equipment under finance leases are stated at
the lower of present value of minimum lease payments or fair
value less the respective accumulated depreciation and any accu-
mulated impairment losses. Depreciation expense is recognized
using the straight-line method. A residual value of the asset is con-
sidered. Property, plant and equipment are depreciated over the
following useful lives:
Leasing. Leasing includes all arrangements that transfer the
right to use a specified asset for a stated period of time in
return for a payment, even if the right to use such asset is not
explicitly described in an arrangement. The Group is a lessee
of property, plant and equipment and a lessor of its products,
principally passenger cars, trucks, vans and buses. It is eva-
luated on the basis of the risks and rewards of a leased asset
whether the ownership of the leased asset is attributed to the
lessee (finance lease) or to the lessor (operating lease). Rent
expense on operating leases where the Group is lessee is recog-
nized over the respective lease terms on a straight-line basis.
Equipment on operating leases where the Group is lessor is
carried initially at its acquisition or manufacturing cost and is
depreciated to its expected residual value over the con-
tractual term of the lease, on a straight-line basis. The same
accounting principles apply to assets if Daimler sells such
assets and leases them back from the buyer.
Impairment of non-financial assets. Daimler assesses at each
reporting date whether there is an indication that an asset may
be impaired. If such indication exists, or when annual impairment
testing for an asset is required (e.g. goodwill, intangible assets
with indefinite useful lives as well as intangible assets not yet in
use), Daimler estimates the recoverable amount of the asset.
The recoverable amount is determined for each individual asset
unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets
(cash-generating unit). The recoverable amount is the higher of
fair value less costs to sell and value in use. Daimler deter-
mines the recoverable amount as fair value less costs to sell and
compares it with the carrying amount (including goodwill).
Fair value is measured by discounting future cash flows using a
risk-adjusted interest rate. Cash flows, which influence the
assessment of residual values, are estimated on the basis of the
operative planning (two years period) supplemented by addi-
tional information from the strategic planning, but principally
without taking any growth rates into account. Periods not
covered by the forecast are taken into account by recognizing a
residual value. If fair value less costs to sell cannot be deter-
mined or is lower than the carrying amount, value in use is calcu-
lated. If the carrying amount exceeds the recoverable amount,
an impairment charge is recognized amounting to the difference.
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that previous-
ly recognized impairment losses may no longer exist or may
have decreased. If this is the case, Daimler records a partial or
an entire reversal of the impairment. Thereby, the carrying
amount is increased to its recoverable amount. However, the
increased carrying amount shall not exceed the carrying amount
that would have been determined (net of amortization or
depreciation) had no impairment loss been recognized in prior
years.
Non-current assets held for sale and disposal groups. Non-
current assets held for sale or disposal groups are classified as
held for sale and disclosed separately in the balance sheet. The
assets or disposal groups are then measured at the lower of
carrying amount and fair value less costs to sell and are no lon-
ger depreciated. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is reversed.
The reversal is restricted to the impairment losses previously
recognized for the assets concerned.
10 to 50 years
6 to 25 years
2 to 30 years
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment