| 14. | Property, Plant and Equipment, Net |
(a) Property, plant and equipment as of December 31, 2016 and 2017 are as follows:
| 2016 | 2017 | |||||||||||||||||||||||||||||||
| Acquisition cost |
Accumulated depreciation and impairment loss |
Government grants |
Book value |
Acquisition cost |
Accumulated depreciation and impairment loss |
Government grants |
Book value |
|||||||||||||||||||||||||
| (in millions of Won) | ||||||||||||||||||||||||||||||||
|
Land |
￦ | 2,607,660 | (6,452 | ) | — | 2,601,208 | 2,534,102 | (6,452 | ) | — | 2,527,650 | |||||||||||||||||||||
|
Buildings |
9,180,028 | (4,183,974 | ) | (423 | ) | 4,995,631 | 9,311,426 | (4,433,996 | ) | (412 | ) | 4,877,018 | ||||||||||||||||||||
|
Structures |
5,385,365 | (2,476,818 | ) | (67 | ) | 2,908,480 | 5,452,713 | (2,686,802 | ) | (59 | ) | 2,765,852 | ||||||||||||||||||||
|
Machinery and equipment |
46,698,254 | (26,379,544 | ) | (320 | ) | 20,318,390 | 46,669,612 | (27,301,410 | ) | (245 | ) | 19,367,957 | ||||||||||||||||||||
|
Vehicles |
306,770 | (259,986 | ) | (85 | ) | 46,699 | 296,815 | (263,884 | ) | (70 | ) | 32,861 | ||||||||||||||||||||
|
Tools |
385,960 | (312,266 | ) | (2,314 | ) | 71,380 | 380,144 | (315,446 | ) | (1,058 | ) | 63,640 | ||||||||||||||||||||
|
Furniture and fixtures |
609,736 | (477,064 | ) | (266 | ) | 132,406 | 643,779 | (498,192 | ) | (148 | ) | 145,439 | ||||||||||||||||||||
|
Finance lease assets |
248,590 | (89,577 | ) | — | 159,013 | 243,160 | (97,903 | ) | — | 145,257 | ||||||||||||||||||||||
|
Bearer plants |
— | — | — | — | 70,031 | (4,516 | ) | — | 65,515 | |||||||||||||||||||||||
|
Construction-in-progress |
2,542,233 | — | (5,101 | ) | 2,537,132 | 1,897,885 | — | (5,539 | ) | 1,892,346 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| ￦ | 67,964,596 | (34,185,681 | ) | (8,576 | ) | 33,770,339 | 67,499,667 | (35,608,601 | ) | (7,531 | ) | 31,883,535 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(b) Changes in the carrying amount of property, plant and equipment for the years ended December 31, 2016 and 2017 were as follows:
1) For the year ended December 31, 2016
| Beginning | Acquisitions | Business combination |
Disposals | Depreciation (*1) | Others (*2) | Ending | ||||||||||||||||||||||
| (in millions of Won) | ||||||||||||||||||||||||||||
|
Land |
￦ | 2,572,807 | 8,901 | 15,687 | (16,176 | ) | (6,452 | ) | 26,441 | 2,601,208 | ||||||||||||||||||
|
Buildings |
5,165,725 | 37,493 | 277,242 | (12,857 | ) | (396,899 | ) | (75,073 | ) | 4,995,631 | ||||||||||||||||||
|
Structures |
2,949,413 | 19,043 | — | (1,994 | ) | (216,631 | ) | 158,649 | 2,908,480 | |||||||||||||||||||
|
Machinery and equipment |
21,093,743 | 193,856 | 47,021 | (36,095 | ) | (2,277,740 | ) | 1,297,605 | 20,318,390 | |||||||||||||||||||
|
Vehicles |
52,005 | 8,967 | 88 | (1,990 | ) | (18,484 | ) | 6,113 | 46,699 | |||||||||||||||||||
|
Tools |
73,478 | 17,546 | 635 | (848 | ) | (27,396 | ) | 7,965 | 71,380 | |||||||||||||||||||
|
Furniture and fixtures |
148,099 | 30,650 | 32 | (4,248 | ) | (51,361 | ) | 9,234 | 132,406 | |||||||||||||||||||
|
Finance lease assets |
92,796 | 79,556 | — | (38 | ) | (13,409 | ) | 108 | 159,013 | |||||||||||||||||||
|
Construction-in-progress |
2,374,789 | 1,935,339 | 2,181 | (4,255 | ) | — | (1,770,922 | ) | 2,537,132 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| ￦ | 34,522,855 | 2,331,351 | 342,886 | (78,501 | ) | (3,008,372 | ) | (339,880 | ) | 33,770,339 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | Includes impairment losses on property, plant and equipment amounting to ￦196,882 million. During the year ended December 31, 2016, due to the existence of indicators for impairment, such as continuing operating loss on fuel cell business of the POSCO ENERGY CO., LTD., which is included in other reportable segment, the Company performed impairment test and recognized impairment loss of ￦61,565 million. Recoverable amount was determined based on value-in-use, which was calculated by applying a 14.0% discount rate. The impairment recorded in 2016 also included ￦58,388 million related to POSCO for individual assets based on disposal plans. |
| (*2) | Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others. |
2) For the year ended December 31, 2017
| Beginning | Acquisitions | Disposals | Depreciation (*1) | Others (*2) | Ending | |||||||||||||||||||
| (in millions of Won) | ||||||||||||||||||||||||
|
Land |
￦ | 2,601,208 | 3,477 | (18,226 | ) | — | (58,809 | ) | 2,527,650 | |||||||||||||||
|
Buildings |
4,995,631 | 53,961 | (5,782 | ) | (361,531 | ) | 194,739 | 4,877,018 | ||||||||||||||||
|
Structures |
2,908,480 | 18,943 | (2,558 | ) | (246,229 | ) | 87,216 | 2,765,852 | ||||||||||||||||
|
Machinery and equipment |
20,318,390 | 194,653 | (93,210 | ) | (2,217,435 | ) | 1,165,559 | 19,367,957 | ||||||||||||||||
|
Vehicles |
46,699 | 9,982 | (1,623 | ) | (22,340 | ) | 143 | 32,861 | ||||||||||||||||
|
Tools |
71,380 | 16,424 | (976 | ) | (28,539 | ) | 5,351 | 63,640 | ||||||||||||||||
|
Furniture and fixtures |
132,406 | 61,597 | (1,296 | ) | (48,416 | ) | 1,148 | 145,439 | ||||||||||||||||
|
Finance lease assets |
159,013 | 4,760 | (453 | ) | (14,810 | ) | (3,253 | ) | 145,257 | |||||||||||||||
|
Bearer plants |
— | — | — | (4,830 | ) | 70,345 | 65,515 | |||||||||||||||||
|
Construction-in-progress |
2,537,132 | 1,894,067 | (817 | ) | (36,706 | ) | (2,501,330 | ) | 1,892,346 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| ￦ | 33,770,339 | 2,257,864 | (124,941 | ) | (2,980,836 | ) | (1,038,891 | ) | 31,883,535 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Includes impairment losses on property, plant and equipment amounting to ￦117,231 million. During the year ended December 31, 2017, due to the existence of indicators for impairment, such as continuing operating loss on Suncheon Bay Personal Rapid Transit business of the Suncheon Eco Trans Co., Ltd, a subsidiary of the Company, the Company performed impairment test and recognized impairment loss of ￦48,070 million. The impairment recorded in 2017 also included ￦17,651 million related to POSCO for individual assets due to a decline in economic result and others. |
| (*2) | Represents assets transferred from construction-in-progress to intangible assets and other property, plant and equipment, reclassifications resulting from changing purpose of use, adjustments of foreign currency translation differences and others. |
(c) Borrowing costs capitalized and the capitalized interest rate for the years ended December 31, 2016 and 2017 were as follows:
| 2016 | 2017 | |||||||
| (in millions of Won) | ||||||||
|
Weighted average expenditure |
￦ | 1,070,280 | 1,180,563 | |||||
|
Borrowing costs capitalized |
40,321 | 37,261 | ||||||
|
Capitalization rate (%) |
3.32 ~ 3.82 | 1.74 ~ 3.45 | ||||||
(d) Property, plant and equipment and investment property pledged as collateral as of December 31, 2016 and 2017 are as follows:
| Book value | ||||||||||
|
Collateral right holder |
2016 | 2017 (*2) | ||||||||
| (in millions of Won) | ||||||||||
|
Land (*1) |
Korean Development Bank and others | ￦ | 925,670 | 822,057 | ||||||
|
Buildings and structures (*1) |
Korean Development Bank and others | 1,734,543 | 1,678,403 | |||||||
|
Machinery and equipment |
Korean Development Bank and others | 4,037,813 | 3,527,420 | |||||||
|
Construction-in-progress |
Korean Development Bank and others | — | 15,389 | |||||||
|
|
|
|
|
|||||||
| ￦ | 6,698,026 | 6,043,269 | ||||||||
|
|
|
|
|
|||||||
| (*1) | Investment property and other assets(land-use right) are included. |
| (*2) | As of December 31, 2017, the pledged amount is ￦4,984,841 million. |