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Read the below excerpt from Lindt Group Annual Report and answer the following questions: 1. Which section of the annual report does the above excerpt represent? Justify your answer. 2. What is the relevance of this section to you as an analyst i.e. how would you use this piece of information? Property, plant, and equipment - Property, plant, and equipment are valued at historical cost, less the accumulated depreciation. The assets are depreciated using the straight-line method over the period of their expected useful economic life. Historical cost includes all costs associated with the acquisition. Subsequent costs increasing the value of an asset are, depending on the case, either recorded in the book value of the asset or as a separate asset, to the extent that it can be assumed that it is likely that the Group will benefit from it in the future and that its costs can be calculated in a reliable manner. All other repair or maintenance costs are reflected in the income statement in the year of their occurrence. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to write down their cost to their residual values. The following useful lives have been applied: - Buildings (incl. installations): 5 - 40 years - Machinery: 10 - 15 years - Other fixed assets: 3-8 years Profits and losses from disposals are recorded in the income statement. Excerpt from Lindt & Sprngli Group, Annual Report (2011) Read the below excerpt from Lindt Group Annual Report and answer the following questions: 1. Which section of the annual report does the above excerpt represent? Justify your answer. 2. What is the relevance of this section to you as an analyst i.e. how would you use this piece of information? Property, plant, and equipment - Property, plant, and equipment are valued at historical cost, less the accumulated depreciation. The assets are depreciated using the straight-line method over the period of their expected useful economic life. Historical cost includes all costs associated with the acquisition. Subsequent costs increasing the value of an asset are, depending on the case, either recorded in the book value of the asset or as a separate asset, to the extent that it can be assumed that it is likely that the Group will benefit from it in the future and that its costs can be calculated in a reliable manner. All other repair or maintenance costs are reflected in the income statement in the year of their occurrence. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to write down their cost to their residual values. The following useful lives have been applied: - Buildings (incl. installations): 5 - 40 years - Machinery: 10 - 15 years - Other fixed assets: 3-8 years Profits and losses from disposals are recorded in the income statement. Excerpt from Lindt & Sprngli Group, Annual Report (2011)
