Notes to the Financial Statements Year ended 31 December 2024 3 MATERIAL ACCOUNTING POLICIES (continued) 3.4 Property, plant and equipment (i) Recognition and measurement Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Certain of the Stapled Group’s property, plant and equipment acquired through interests in subsidiaries, are accounted for as acquisition of assets. Subsequent to recognition, land and buildings are measured at fair value less accumulated depreciation and accumulated impairment losses while other plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Any surplus arising on the revaluation is recognised in OCI or Stapled Securityholders’ funds (as the case may be), except to the extent that the surplus reverses a previous revaluation deficit on the same asset recognised in the Statement of Total Return, in which case the credit to that extent is recognised in the Statement of Total Return. Any deficit on revaluation is recognised in the Statement of Total Return except to the extent that it reverses a previous revaluation surplus on the same asset, in which case the debit to that extent is recognised in OCI or Stapled Securityholders’ funds (as the case may be). The gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in the Statement of Total Return. (ii) Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset if it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Stapled Group and its cost can be measured reliably. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. (iii) Depreciation Depreciation is recognised from the date that the property, plant and equipment are installed and are ready for use. Depreciation on property, plant and equipment is recognised in the Statement of Total Return on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment as follows: Land and buildings – 30 to 83 years Plant and machinery – 2 to 15 years Renovation – 8 to 12 years Motor vehicles – 5 to 8 years Office equipment, computers and furniture – 2 to 10 years Freehold land and assets under construction are stated at cost and are not depreciated. The assets’ residual values, useful lives and depreciation methods are reviewed at each reporting date, and adjusted if appropriate. 161 Annual Report 2024
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