Tangible and intangible assets
|5.2 Tangible and intangible assets|
|11. PROPERTY, PLANT AND EQUIPMENT, € 1,000||2017||2016|
|Land and water areas|
|Cost at 1 Jan||15,701||15,349|
|Increases 1 Jan - 31 Dec||274||393|
|Decreases 1 Jan - 31 Dec||-41|
|Cost at 31 Dec||15,974||15,701|
|Carrying amount 31 Dec||15,974||15,701|
|Buildings and structures|
|Cost at 1 Jan||254,823||220,357|
|Increases 1 Jan - 31 Dec||24,614||34,634|
|Decreases 1 Jan - 31 Dec||-5||-168|
|Cost at 31 Dec||279,432||254,823|
|Accumulated depreciation 1 Jan||-61,108||-53,077|
|Decreases, depreciation 1 Jan - 31 Dec||5||73|
|Depreciation 1 Jan - 31 Dec||-8,538||-8,103|
|Carrying amount 31 Dec||209,792||193,716|
|Machinery and equipment|
|Cost at 1 Jan||1,115,218||1,053,479|
|Increases 1 Jan - 31 Dec||31,992||61,839|
|Decreases 1 Jan - 31 Dec||-718||-100|
|Cost at 31 Dec||1,146,492||1,115,218|
|Accumulated depreciation 1 Jan||-536,937||-485,852|
|Decreases, depreciation 1 Jan - 31 Dec||718||8|
|Depreciation 1 Jan - 31 Dec||-48,224||-51,094|
|Carrying amount 31 Dec||562,049||578,281|
|Cost at 1 Jan||1,307,111||1,238,261|
|Increases 1 Jan - 31 Dec||-1,658||74,414|
|Decreases 1 Jan - 31 Dec||-433||-5,565|
|Cost at 31 Dec||1,305,020||1,307,111|
|Accumulated depreciation 1 Jan||-482,073||-448,647|
|Decreases, depreciation 1 Jan - 31 Dec||184||3,944|
|Depreciation 1 Jan - 31 Dec||-36,894||-37,370|
|Carrying amount 31 Dec||786,237||825,038|
|Other property, plant and equipment|
|Cost at 1 Jan||23,721||22,756|
|Increases 1 Jan - 31 Dec||424||966|
|Cost at 31 Dec||24,145||23,721|
|Accumulated depreciation 1 Jan||-16,119||-15,208|
|Depreciation 1 Jan - 31 Dec||-966||-911|
|Carrying amount 31 Dec||7,060||7,602|
|Prepayments and purchases in progress|
|Cost at 1 Jan||59,404||120,816|
|Increases 1 Jan - 31 Dec||94,299||116,534|
|Transfers to other tangible and intangible assets 1 Jan - 31 Dec||-70,047||-177,946|
|Cost at 31 Dec||83,656||59,404|
|Carrying amount 31 Dec||83,656||59,404|
|Cost at 1 Jan||11,442||9,426|
|Increases 1 Jan - 31 Dec||1,223||2,016|
|Cost at 31 Dec||12,664||11,442|
|Accumulated depreciation 1 Jan||-1,021||-676|
|Depreciation on capitalised interest 1 Jan - 31 Dec||-412||-345|
|Carrying amount 31 Dec||11,232||10,421|
|Carrying amount 31 Dec||94,888||69,825|
|Property, plant and equipment||1,675,999||1,690,162|
|12. INTANGIBLE ASSETS, €1,000||2017||2016|
|Land use rights|
|Cost at 1 Jan||94,507||92,749|
|Increases 1 Jan - 31 Dec||706||2,022|
|Decreases 1 Jan - 31 Dec||-126||-263|
|Cost at 31 Dec||95,087||94,507|
|Carrying amount 31 Dec||95,087||94,507|
|Other intangible assets|
|Cost at 1 Jan||31,644||30,853|
|Increases 1 Jan - 31 Dec||4,974||848|
|Decreases 1 Jan - 31 Dec||-485||-57|
|Cost at 31 Dec||36,133||31,644|
|Accumulated depreciation 1 Jan||-29,571||-28,173|
|Depreciation 1 Jan - 31 Dec||-1,855||-1,398|
|Carrying amount 31 Dec||4,707||2,073|
|Carrying amount 31 Dec||99,795||96,580|
Land use rights are not depreciated but tested annually for impairment in connection with the testing of goodwill. No need for impairment has been noted as a result of the testing.
The entire business of the Fingrid Group is grid operations in Finland with system responsibility, which the full goodwill of the Group in the balance sheet is fully allocated to. The goodwill included in the balance sheet amounts to EUR 87.9 million and has not changed during the periods under review. Since, per the regulation, the fair value of the net assets included in the company’s grid assets is approximately EUR 2,800.0 million compared to the carrying amount of EUR 1,863.7 million in net assets, which includes land use rights and goodwill, the book value of the asset items has not decreased.
Propert, plant and equipment
Grid assets form most of the property, plant and equipment. Grid assets include, among other things, 400 kV, 220 kV, 110 kV transmission lines, direct current lines, transmission line right-of-ways, substations and the areas they encompass (buildings, structures, machinery and equipment, substation access roads), gas turbine power plants, fuel tanks, generators and turbines.
Property, plant and equipment are valued in the balance sheet at the original acquisition cost less accumulated depreciation and potential impairment. If an asset is made up of several parts with useful lives of different lengths, the parts are treated as separate items and are depreciated over their separate useful lives.
When a part of property, plant and equipment that is treated as a separate item is replaced, the costs relating to the new part are capitalised. Other subsequent costs are capitalised only if it is likely that the future economic benefit relating to the asset benefits the Group and the acquisition cost of the asset can be determined reliably. Repair and maintenance costs are recognised in the income statement when they are incurred.
Borrowing costs, such as interest costs and arrangement fees, directly linked with the acquisition, construction or manufacture of a qualifying asset form part of the acquisition cost of the asset item in question. A qualifying commodity is one that necessarily requires a considerably long time to be made ready for its intended purpose. Other borrowing costs are recognised as an expense. Borrowing costs included in the acquisition cost are calculated on the basis of the average borrowing cost of the Group.
Property, plant and equipment is depreciated over the useful life of the item using the straight-line method. Depreciation on property, plant and equipment taken into use during the financial year is calculated on an item-by-item basis from the month of introduction. Land and water areas are not depreciated. The expected economic lives are verified at each closing date, and if they differ significantly from the earlier estimates, the depreciation periods are amended accordingly.
The depreciation periods of property, plant and equipment are as follows:
Machinery and equipment
Gains or losses from the sale or disposition of property, plant and equipment are recognised in the income statement under either other operating income or expenses. Property, plant and equipment are derecognised in the balance sheet when their economic useful life has expired, the asset has been sold, scrapped or otherwise disposed of to an outsider.
Goodwill and other intangible assets
Goodwill created as a result of the acquisition of enterprises and businesses is composed of the difference between the acquisition cost and the net identifiable assets of the acquired business valued at fair value. Goodwill is allocated to cash-generating units and is tested annually for impairment. With associated companies, goodwill is included in the value of the investment in the associated company.
Other intangible assets consist of computer software and land use and emission rights. Computer software is valued at its original acquisition cost and depreciated on a straight line basis during its estimated useful life. Land use rights, which have an indefinite useful life, are not depreciated but are tested annually for impairment.
More on emission rights in chapter 7.2.
Subsequent expenses relating to intangible assets are only capitalised if their economic benefits to the company increase beyond the former performance level. In other cases, expenses are recognised in the income statement when they are incurred.