Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of conversion of inventories includes direct labor and fixed and variable production overheads. Abnormal wastes, storage, selling costs, administrative overhead are expensed. The inventories were valued using FIFO method. Net realizable value indicates the estimated selling price less the estimated cost of completion of the product and all selling expenses.

Property, plant and equipment

Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses. The costs of PPE comprises purchase price, any costs directly attributable to bringing asset to the location and condition necessary to it to be capable of operating, estimated cost of dismantling and removing the asset and restoring the site. Administration overhead, costs of advertising, borrowing costs are not included in cost of PPE. Depreciation is calculated using the straight-line method over the useful life of the asset. The useful lives and residual values are evaluated annually.

The useful lives are as follows:

Buildings 20-40 years

Machinery and equipment 10-25 years

Tools, furniture, information technology 3-10 years

Vehicles 3-8 years

Land is not depreciated.

Intangible assets

Intangible assets are identifiable only when, it is separable and arises from contractual or other legal rights. Examples are patents, licenses, copyrights, trademarks, brand name, computer software, motion pictures and etc. Intangible assets can be recognized only if it is probable that 1) the expected future economic benefits flow to the company; 2) the cost of the asset can be measured reliably; 3) assets are not result from expenditure incurred internally.

On initial recognition all intangible assets should be measured at cost. The cost comprises purchase price, any directly attributable cost of preparing the assets to its intendant use. After initial recognition intangible assets should be carried at cost less accumulated amortization and impairment loss. They are amortized over their useful economic life using straight-line method.

The useful lives are as follows:

Trademark 5 years

Licenses 1-3 years

Brand name 5 years

Computer software 3-5 years

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