BASF Report 2021 Consoli dated Financial Statements – Notes 240 15 Property, plant and equipment Both movable and immovable fixed assets are principally depreciated Borrowing costs: If borrowing costs are directly incurred as part of using the straight-line method. The estimated useful lives and the acquisition, construction or production of a qualifying asset, they Accounting policies depreciation methods of property, plant and equipment are based are capitalized as part of the acquisition or production cost of that on historical values, plans and estimates. The depreciation methods, asset. A qualifying asset is an asset for which the process necessary Property, plant and equipment are measured at cost less useful lives and residual values are reviewed at each balance sheet to make it ready for its intended use or sale is longer than one year. depreciation and impairment over their useful lives. The revaluation date. Borrowing costs are capitalized up to the date the asset is ready for method is not applied. Low-value assets are fully expensed in the its intended use. Borrowing costs were calculated based on a rate year of acquisition. The weighted average depreciation periods of continuing operations of 1.25% (previous year: 1.5%) and adjusted on a country-specific were as follows: basis, if necessary. All other borrowing costs are recognized as an The cost of self-constructed plants includes direct costs, appropriate expense in the period in which they are incurred. allocations of material and production overhead costs, and a share Weighted average depreciation in years of the general administrative costs of the divisions involved in the 2021 2020 Government grants: Government grants related to the acquisition construction of the plants. or construction of property, plant and equipment reduce the Buildings and structural installations 18 16 acquisition or construction cost of the respective assets. Other Expenses related to the scheduled maintenance of large-scale Machinery and technical equipment 11 10 government grants or government assistance are recognized plants are capitalized separately and depreciated using the Miscellaneous equipment and fixtures 7 6 immediately as other operating income or treated as deferred straight-line method over the period until the next planned income and released over the underlying period. turnaround. Costs for the replacement of components are If there is indication of a possible cause for impairment, an impairment recognized as assets if an additional future benefit is expected. The test is performed. Impairments to property, plant and equipment are carrying amount of the replaced components is derecognized. recognized if the recoverable amount of the asset is lower than the Costs for maintenance and repair as part of normal business carrying amount. The measurement is based on fair value less costs operations are recognized as an expense. to sell or the value in use. An impairment is recognized for the difference between the carrying amount and the recoverable As lessee, BASF generally recognizes all leases in the balance sheet. amount. If the reasons for an impairment no longer exist, the The right-of-use assets from leases and lease liabilities are measur ed write-downs are reversed up to the value of the asset, had an at the present value of the financial commitments entered. impairment not been recognized. Impairments and reversals of For more information, see Note 16 from page 244 onward impairments are reported in other operating income and expenses. For more information on the value in use and the weighted cost of capital rate, see Note 1 from Investment properties held to realize capital gains or rental income page 200 onward are immaterial. They are valued at the lower of fair value or cost less depreciation.