D2. Property, plant and equipment

AP ACCOUNTING PRINCIPLES

Property, plant and equipment

Property, plant and equipment is recognized at cost less accumulated depreciation and any impairment. In cases where an investment in foreign currency has been recognized using hedge accounting, the gain/loss from the hedge is recognized as part of the acquisition cost. The cost of properties and production facilities included in major projects includes costs for running-in and start-up. Borrowing costs are included in the cost of investments exceeding SEK 250m that take more than 12 months to complete. Expenses for repairs and maintenance are expensed directly in profit or loss.

Depreciation and impairment

Land is not subject to depreciation. Buildings, machinery and equipment are depreciated on a straight-line basis over the useful lives of the assets. If, at accounting year-end, there is an indication that property, plant and equipment has declined in value, impairment testing is carried out.

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Assessed useful lives
	Number of years
Pulp and paper mills, sawmills	10–25
Converting machines, other machinery	7–18
Tools	3–10
Vehicles	4–5
Buildings	15–50
Energy plants	15–30
Computers	3–5
Office equipment	5–10
Harbors, railways	20–30
Land improvements, forest roads	10–20

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Property, plant and equipment
	Buildings			Land			Machinery and equipment			Construction in progress
SEKm	2015	2014	2013	2015	2014	2013	2015	2014	2013	2015	2014	2013
Accumulated costs	22 802	22 007	18 558	7 437	7 422	7 000	86 804	84 367	71 633	4 023	4 368	3 414
Accumulated depreciation	–9 653	–9 023	–7 751	–1 826	–1 679	–1 530	–52 403	–50 009	–41 667	–	–	–
Accumulated impairment	–407	–222	–216	–70	–32	–50	–2 173	–847	–865	–2	–7	–8
Property, plant and equipment Vinda	–	–	867	–	–	–	–	–	3 392	–	–	–
Total	12 742	12 762	11 458	5 541	5 711	5 420	32 228	33 511	32 493	4 021	4 361	3 406
Value, January 1	12 762	11 458	9 912	5 711	5 420	5 252	33 511	32 493	28 533	4 361	3 406	4 073
Investments	505	389	646	154	163	214	2 337	2 342	1 894	4 337	2 713	2 642
Sales and disposals	–2	–13	–14	–7	–35	–3	–134	–56	–68	–23	–8	–34
Company acquisitions	–	1	861	–	1	–	–	52	3 330	–	2	–
Company divestments	–	–	–4	–	–	–24	–48	–	–29	–	–	–
Reclassifications	926	796	620	28	77	114	3 361	1 143	2 739	–4 516	–1 711	–3 223
Depreciation	–873	–723	–650	–143	–136	–131	–4 652	–4 369	–3 935	–	–	–
Impairment	–197	–9	–5	–48	–3	–43	–1 394	–50	–131	–	–	–
Translation differences	–379	863	92	–154	224	41	–753	1 956	160	–138	–41	–52
Value, December 31	12 742	12 762	11 458	5 541	5 711	5 420	32 228	33 511	32 493	4 021	4 361	3 406

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Total property, plant and equipment
SEKm	2015	2014	2013
Accumulated costs	121 066	118 164	100 605
Accumulated depreciation	–63 882	–60 711	–50 948
Accumulated impairment	–2 652	–1 108	–1 139
Property, plant and equipment Vinda	–	–	4 259
Total	54 532	56 345	52 777
Value, January 1	56 345	52 777	47 770
Investments	7 333	5 607	5 396
Sales and disposals	–166	–112	–119
Company acquisitions	–	56	4 191
Company divestments	–48	–	–57
Reclassifications	–201	305	250
Depreciation	–5 668	–5 228	–4 716
Impairment	–1 639	–62	–179
Translation differences	–1 424	3 002	241
BS Value, December 31	54 532	56 345	52 777

Impairment mainly pertains to the Ortviken paper mill. Due to a decline in global demand for newsprint and weak profitability, non-current assets at Ortviken paper mill were impaired by SEK –1,263m to their recoverable amount. The Ortviken paper mill is part of the Forest Products operating segment. The recoverable amount of the non-current assets was determined through a present value calculation, in which expected future cash flows were discounted using a WACC before tax of 6% to determine the value in use.

During the period, interest was capitalized in machinery and equipment in an amount of SEK 47m (29; 23) and in construction in progress in an amount of SEK 3m (6; 1). The average interest rate used was 7% (2; 3).