Assets under construction are recognized at cost and are depreciated when they enter useful life. When an asset consists of components with a significant cost and different useful lives, initial recognition and subsequent measurement are effected separately for each component. Subsequent expense Repair and maintenance expense is normally recognized as incurred. Component replacement costs are treated as separate assets and the net carrying amount of the replaced component is expensed. Depreciation Depreciation is generally calculated on a straight-line basis over the estimated useful life of each component of an asset. Land is not depreciated, with the exception of land used for quarrying operations. Asset useful life determines the depreciation rate until a subsequent review of residual useful life. The range of useful lives used for the various categories of assets is disclosed in the notes. Quarries Costs for the preparation and excavation of land to be quarried are amortized as the economic benefits of such costs are obtained. Quarry land is depreciated at rates reflecting the quantities extracted in the period in relation to the estimated total to be extracted over the period in which the quarry is to be worked. The Group makes specific provision for quarry environmental restoration obligations. Since the financial resources required to settle such obligations are directly related to the degree of use, the charge cannot be defined at inception with an offset to the asset cost, but is provided to reflect the degree of use of the quarry.
Leases Finance leases, which transfer to the Group all risks and rewards incident to ownership of the leased asset, are recognized from the lease inception date at the lower of the leased asset fair value or the present value of the lease payments. Lease payments are apportioned between finance costs and reductions against the residual liability so as to obtain a constant rate of interest on the outstanding liability. The policies used for depreciation and subsequent measurement of leased assets are consistent with those used for the Group’s own property, plant and equipment. Lease contracts where all risks and rewards incident to ownership are retained by the lessor are classified as operating leases. Operating lease payments are recognized as expense on a straight-line basis over the lease term.
Investment properties Investment properties are land and/or buildings held to earn rentals and/or for capital appreciation, rather than for use in the production or supply of goods and services. Investment properties are initially recognized at purchase cost, including costs directly attributable to the purchase. Subsequent to initial recognition, investment properties are measured at amortized cost.
Goodwill Goodwill arising from business combinations is measured initially at cost and since January 1, 2004, is no longer subject to amortization. As from the purchase date, goodwill is apportioned to the cash-generating units that are expected to benefit from the synergies created by the acquisition and is tested on an annual basis or more frequently if indications of impairment emerge. When goodwill is attributed to a cash-generating unit part of whose assets are disposed of, the goodwill associated with the sold assets is taken into account when determining the capital gain or loss arising from the transaction.
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