The ‘Other changes’ in 2016 were mainly due to the transfer of property, plant and equipment amounting to €76 million to ‘Assets held for sale’ (note 18). ‘Assets under construction’ consist primarily of investments in trains and buildings. In 2017, there was an adjustment of €18 million to the depreciation; this concerned maintenance costs that had incorrectly been capitalised in the past. No error correction was made for reasons of material relevance, and the amount was adjusted in the depreciation.
Some of the trains included in the balance sheet are covered by past cross-border lease transactions. The carrying amount of rolling stock financed by cross-border leases was €73 million as at year-end 2017 (2016: €81 million).
Collateral has been provided for EUROFIMA loans in the form of pledges on rolling stock (see too note 31). The carrying amount for this is €4 million (2016: €10 million). The reduction in the pledge is mainly due to the reduction in the EUROFIMA loans.
Property, plant and equipment are measured at cost, less cumulative depreciation and cumulative impairment losses. The cost of self-produced assets includes the cost of materials, direct labour costs, a reasonable portion of the indirect production costs, and capitalised financing costs. Where relevant, the estimated costs of dismantling and removing the asset and the costs of restoring the site where the asset was located are added to the total cost.
Computer software that is an integral part of the computer equipment is capitalised as part of the equipment in question. Assets where the Group only has beneficial ownership are recognised in the balance sheet.
Gains and losses on divestment of an item of property, plant and equipment are determined by comparing the proceeds from divestment with the carrying amount of the asset and the net value is then recognised in ‘Other revenue’ in the income statement.
If property, plant and equipment consist of components with differing useful lives, these components are listed as separate items under property, plant and equipment.
The carrying amount of property, plant and equipment is adjusted for the cost of replacing all or part of that asset when such costs are incurred and if it is likely that the replacement will deliver future economic benefits. All other costs of maintaining the asset are charged to the income statement as and when they are incurred.
Depreciation of property, plant and equipment is on a straight-line basis, after deducting the residual value and based on the estimated useful life of each individual item of property, plant and equipment. Depreciation is charged to the income statement.
Except where it is reasonably certain that the Group will be taking over ownership of a leased asset at the end of the lease period, leased assets (finance leases) are depreciated over the period of the lease agreement or the useful life (whichever is the shorter). Land is not depreciated, with the exception of street paving. The estimated useful life (depreciation term) for different types of property, plant and equipment is as follows.
broken down into components (15 to 100 years); average 40 years
Other fixed plant
10 to 25 years
6 to15 years
Plant and equipments
3 to10 years
The specified useful life is an average for the assets concerned and for any components of those assets.
The depreciation method, remaining useful life and residual value are assessed each year.
If a change in use causes an item of property, plant and equipment to be treated as investment property or if an investment property is intended for the company’s own use, it is transferred to ‘investment property’ or ‘property, plant and equipment’ respectively. Because both categories of non-current assets are measured in the same way, the transfer is at the carrying amount.