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Property, plant and equipment
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Property, plant and equipment are measured at cost, including directly attributable costs and financing costs, less accumulated depreciation, accumulated impairment losses and any related investment grants and excluding day-to-day servicing expenses. Cost includes spare parts and auxiliary equipment that can be used only in connection with the plant and equipment.
The Company's assets include computer systems comprising hardware and software. Software forming an integral part of the hardware to the extent that the hardware cannot function without the programs installed on it is classified as property, plant and equipment. In contrast, software that adds functionality to the hardware is classified as an intangible asset.
The cost of assets includes the cost of materials, direct labor costs, as well as any costs directly attributable to bringing the asset to the location and condition necessary for it to operate in the manner intended by management.
Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
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%
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Mainly %
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Buildings
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2.5-4
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4
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Machinery and equipment
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10-20
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15
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Vehicles
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15
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15
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Computers, software, equipment and office furniture
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6-33
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33
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Leasehold improvements
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(*
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)
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10
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(*) Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term (including the extension option held by the Company and intended to be exercised) and the expected life of the improvement.
The useful life, depreciation method and residual value of an asset are reviewed at the year-end and any changes are accounted for prospectively as a change in accounting estimate.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized.
