DHL 2014 Annual Report Download - page 154

Property, plant and equipment
Property, plant and equipment is carried at cost, reduced by
accumu lated depreciation and valuation allowances. In addition
to direct costs, production cost includes an appropriate share of
allocable production overhead costs. Borrowing costs that can be
allocated directly to the purchase, construction or manufacture
of property, plant and equipment are capitalised. Value added tax
arising in conjunction with the acquisition or production of items
of property, plant or equipment is included in the cost if it can-
not be deducted as input tax. Depreciation is charged using the
straight-line method. e estimated useful lives applied to the
major asset classes are presented in the table below:
Useful lives
Years 1
Buildings 20 to 50
Technical equipment and machinery 10 to 20
Aircraft 15 to 20
 systems 4 to 5
Transport equipment and vehicle fleet 4 to 18
Other operating and oce equipment 8 to 10
1 The useful lives indicated represent maximum amounts specified by the Group.
The actual useful lives may be shorter due to contractual arrangements or other
specific factors such as time and location.
Useful lives for letter sorting systems were extended from ten to
years and those for parcel sorting systems from  to  years
in nancial year , based on an improved estimate. A stand-
ard adjustment to  years was made for operational and admin-
istrative buildings. e useful lives were adjusted prospectively
as a change in accounting estimates; they have not been adjusted
retrospectively for prior periods. Application of the adjusted use-
ful lives caused depreciation to decrease by  million in nan-
cial year . It is expected that depreciation will be reduced by
 million for nan cial year  and by  million for nancial
year.
If there are indications of impairment, an impairment test
must be carried out; section headed Impairment.
Impairment
At each balance sheet date, the carrying amounts of intangible
assets, property, plant and equipment and investment property
are reviewed for indications of impairment. If there are any such
indications, an impairment test must be carried out. is is done
by determining the recoverable amount of the relevant asset and
comparing it with the carrying amount.
In accordance with  , the recoverable amount is the
asset’s fair value less costs to sell or its value in use, whichever is
higher. e value in use is the present value of the pre-tax free cash
ows expected to be derived from the asset in future. e discount
rate used is a pre-tax rate of interest reecting current market
conditions. If the recoverable amount cannot be determined for
an individual asset, the recoverable amount is determined for the
smallest identiable group of assets to which the asset in question
can be allocated and which generates independent cash ows (cash
generating unit – ). If the recoverable amount of an asset is
lower than its carrying amount, an impairment loss is recognised
immediately in respect of the asset. If, aer an impairment loss has
been recognised, a higher recoverable amount is determined for
the asset or the  at a later date, the impairment loss is reversed
up to a carrying amount that does not exceed the recoverable
amount. e increased carrying amount attributable to the rever-
sal of the impairment loss is limited to the carrying amount that
would have been determined (net of amortisation or depreciation)
if no impairment loss had been recognised in the past. e rever-
sal of the impairment loss is recognised in the income statement.
Impairment losses recognised in respect of goodwill may not be
reversed.
Since January , goodwill has been accounted for using
the impairment-only approach in accordance with  . is
stipulates that goodwill must be subsequently measured at cost,
less any cumulative adjustments from impairment losses. Pur-
chased goodwill is therefore no longer amortised and instead is
tested for impairment annually in accordance with  , regard-
less of whether any indication of possible impairment exists, as in
the case of intangible assets with an indenite useful life. In addi-
tion, the obligation remains to conduct an impairment test if there
is any indication of impairment. Goodwill resulting from company
acquisitions is allocated to the identiable groups of assets ( s
or groups of  s) that are expected to benet from the synergies
of the acquisition. ese groups represent the lowest reporting level
at which the goodwill is monitored for internal management pur-
poses. e carrying amount of a  to which goodwill has been
allocated is tested for impairment annually and whenever there is
an indication that the unit may be impaired. Where impairment
losses are recognised in connection with a  to which goodwill
has been allocated, the existing carrying amount of the goodwill
is reduced rst. If the amount of the impairment loss exceeds the
carrying amount of the goodwill, the dierence is allocated to the
remaining non-current assets in the .
Finance leases
A lease nancing transaction is an agreement in which the lessor
conveys to the lessee the right to use an asset for a specied period
in return for a payment or a number of payments. In accordance
with  , benecial ownership of leased assets is attributed to
the lessee if the lessee substantially bears all risks and rewards inci-
dent to ownership of the leased asset. To the extent that benecial
ownership is attributable to the Group as the lessee, the asset is
capitalised at the date on which use starts, either at fair value or at
the present value of the minimum lease payments if this is less than
the fair value. A lease liability in the same amount is recognised
under non-current liabilities. e lease is subsequently measured
at amortised cost using the eective interest method. e depre-
ciation methods and estimated useful lives correspond to those of
comparable purchased assets.
Deutsche Post  Group —  Annual Report
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