Page 23 - KELAG Annual Report 2017

In accordance with IAS 38, acquired intangible assets are measured at cost and any impairment
losses less straight-line amortisation, provided that they do not have an indefinite useful life. The
cost of long-term projects includes borrowing costs (see the explanations on judgements for
more details) if the recognition criteria are met. The useful life of water usage rights and other
rights of use is measured using the useful life of the facilities or based on contractual agreements.
In the KELAG Group, software is always amortised over a period of four or five years. Software
developed to the Group’s specifications is amortised over 10 years.

As long as intangible assets are not yet available for use, they must be tested for impairment
annually.

Property, plant and equipment is recognised at cost (including restoration and decommissioning
costs to be capitalised), net of accumulated depreciation and/or accumulated impairment losses.

The cost of self-constructed assets includes direct labour and materials costs and an appropriate
portion of overheads.

This cost includes, among other things, the cost of replacing part of the property, plant and
equipment and borrowing costs for long-term construction projects (see the explanations on
judgements for more details) if the recognition criteria are met.

When significant parts of property, plant and equipment are required to be replaced at intervals,
the Group recognises such parts as individual assets with specific useful lives and depreciation in
each case. When a major inspection is performed (mainly turbine inspections), its cost is
recognised in the carrying amount of the item of property, plant and equipment as a replacement
if the recognition criteria are satisfied. All other repair and maintenance costs are recognised
through profit or loss as incurred.

An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal.

Depreciation of property, plant and equipment subject to depletion is based on the expected
useful lives. The following useful lives have been used: