back 
Property, plant and equipment is stated at depreciated cost. The borrowing cost is not capitalized as part of the cost. If necessary, the cost of property, plant and equipment may contain the estimated expenses for the decommissioning of plants or site restoration. Maintenance and repair costs are recognized as expenses.
Exploratory wells are accounted for at cost, according to the successful efforts method, i.e. expenses for exploration activities are only capitalized for successful projects.
For example, only wells which are related to the discovery of crude oil or natural gas may be capitalized. Seismology and geology expenditures are recognized as expenses. Within the framework of the unit-of-production method, capitalized exploration assets are not depreciated or amortized during the exploration phase, but rather when production begins. Exploration assets are tested for impairment as soon as facts and information indicate that the carrying value exceeds the recoverable amount.
With the exception of land and leasehold rights, as a rule, property, plant and equipment is depreciated using the straight-line method, unless in exceptional cases another depreciation method is better suited to the usage pattern. The depreciation of RWE’s typical property, plant and equipment is calculated according to the following useful lives, which apply throughout the Group:
|
Useful life in years |
|
|
Buildings |
12 – 80 |
|
Technical plants |
|
|
Thermal power plants |
15 – 20 |
|
Wind turbines |
up to 20 |
|
Electricity grids |
20 – 45 |
|
Water main networks |
20 – 75 |
|
Gas and water storage facilities |
20 – 70 |
|
Gas distribution facilities |
14 – 30 |
|
Mining facilities |
4 – 25 |
|
Mining developments |
33 – 35 |
|
Wells owned by RWE Dea |
up to 28 |
Property, plant and equipment held under a finance lease is capitalized at the lower of the fair value of the leased asset or the present value of the lease payments, and is depreciated using the straight-line method over its expected useful life or the lease term, whichever is shorter.
Impairment losses for plant, property and equipment are recognized according to the principles described for intangible assets. If the reason for an impairment loss recognized in prior years has ceased to exist, a write-back is performed. In such cases, the increased carrying amount resulting from the write-back may not exceed the depreciated cost.
