Tangible assets are measured at purchase price or at production cost and are recognized net of any accumulated depreciation.
Cost includes associated expenses and any direct and indirect costs incurred at the moment of acquisition and necessary to make the asset ready for use.
Fixed assets are depreciated on a straight-line basis each year in relation to the remaining useful life of the various assets.
Land, assets under construction and advance payments are not depreciated.
Real estate not held for instrumental or operating purposes is classified under a special item of assets and is accounted for on the basis of the terms of IAS 40 “Investment property” (see the following paragraph 1.c.).
Should there be any events which one can assume will cause a lasting reduction in the value of an asset, its carrying value is checked against its recoverable value, which is the higher of fair value and value in use.
Fair value is defined on the basis of values expressed by the active market, by recent transactions or from the best information available to determine the potential amount obtainable from the sale of the asset.
Value in use is determined from the net present value of cash flows resulting from the use expected of the same asset, applying the best estimate of its residual useful life and a rate that also takes into account the implicit risk of the specific business sectors in which the company operates. This valuation is carried out for each individual asset or for the smallest identifiable independent cash generating unit (CGU).
Where there is a negative difference between the values stated above and the carrying value then the asset is written down, while as soon as the reasons for such loss in value cease to exist then the asset is revaluated. Write-downs and revaluations are posted to the income statement.