Property, Plant and Equipment Accounting Policy
Property, plant and equipment is initially measured and recognized at acquisition cost, including any directly attributable cost of preparing the asset for its intended use, or (in the case of assets acquired in a business combination) at fair value as at the date of the combination. The component-based approach to accounting for property, plant and equipment is applied. Under this approach, each component of an item of property, plant and equipment with a cost which is significant in relation to the total cost of the item and which has a different useful life from the other components must be depreciated separately.
After initial measurement, property, plant and equipment is carried at cost less accumulated depreciation and impairment, except for land which is carried at cost less impairment.
Subsequent costs are not recognized as assets, unless (i) it is probable that future economic benefits associated with these costs will flow to Sanofi, and (ii) the costs can be measured reliably.
Day-to-day maintenance costs of property, plant and equipment are expensed as incurred.
Borrowing costs attributable to the financing of items of property, plant and equipment, and incurred during the construction period of such items, are capitalized as part of the acquisition cost of the item.
Government grants relating to non-current assets are deducted from the acquisition cost of the asset to which they relate.
In accordance with IAS 17, Leases, items of property, plant and equipment, leased by Sanofi as lessee under finance leases, are recognized as an asset in the balance sheet, with the related lease obligation recognized as a liability. A lease qualifies as a finance lease if it transfers substantially all the risks and rewards of ownership of the asset to Sanofi. Assets held under finance leases are carried at the lower of the fair value of the leased asset or the present value of the minimum lease payments, and are depreciated over the shorter of the useful life of the asset or the term of the lease.
The depreciable amount of items of property, plant and equipment, net of any residual value, is depreciated on a straight line basis over the useful life of the asset. The useful life of an asset is usually equivalent to its economic life.
The useful lives of property, plant and equipment are as follows:
| Buildings |
15 to 40 years |
| Fixtures |
10 to 20 years |
| Plant and equipment |
5 to 15 years |
| Other tangible assets |
3 to 15 years |
Useful lives and residual values of property, plant and equipment are reviewed annually. The effect of any adjustment to useful lives or residual values is recognized prospectively as a change of accounting estimate.
Depreciation of property, plant and equipment is recognized as an expense in the income statement, in the relevant classification of expense by function.
Source: Sanofi, Annual Report
Property, Plant and Equipment Disclosure
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Sanofi, Statement of Financial Position, Property, Plant and Equipment
USD $ in millions, translated from EUR €
Source: Based on data from Sanofi Annual Reports
| Item |
Description |
The company |
| Land |
Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. |
Sanofi's land declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Buildings |
Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing. |
Sanofi's buildings increased from 2009 to 2010 and from 2010 to 2011.
|
| Plant & equipment |
Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services. |
Sanofi's plant & equipment increased from 2009 to 2010 and from 2010 to 2011.
|
| Fixtures, fittings & other |
Carrying amount at the balance sheet date for long-lived, depreciable asset commonly used in offices and stores. Examples include desks, chairs, and store fixtures. |
Sanofi's fixtures, fittings & other declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Property, plant and equipment in process |
Carrying amount at the balance sheet date of long-lived asset under construction that include construction costs to date on capital projects that have not been completed and assets being constructed that are not ready to be placed into service. |
Sanofi's property, plant and equipment in process declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Property, plant and equipment, gross value |
Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation. |
Sanofi's property, plant and equipment, gross value increased from 2009 to 2010 and from 2010 to 2011.
|
| Property, plant and equipment, carrying amount |
Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment. |
Sanofi's property, plant and equipment, carrying amount declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
Property, Plant and Equipment Ratios (Summary)
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Sanofi, Property, Plant and Equipment Ratios
| Ratio |
Description |
The company |
| Average age |
As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. |
Sanofi's average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 not reaching 2009 level.
|
| Estimated total useful life |
Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. |
Sanofi's estimated total useful life of depreciable property, plant and equipment increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
| Estimated time elapsed since purchase |
The approximate age in years of a company's fixed assets. Useful for comparison purposes. |
Sanofi's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 exceeding 2009 level.
|
| Estimated remaining life |
|
Sanofi's estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
Average Age
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2011 Calculations
| Ratio |
Description |
The company |
| Average age |
As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. |
Sanofi's average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 not reaching 2009 level.
|
Estimated Total Useful Life
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2011 Calculations
| Ratio |
Description |
The company |
| Estimated total useful life |
Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. |
Sanofi's estimated total useful life of depreciable property, plant and equipment increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
Estimated Age, Time Elapsed Since Purchase
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2011 Calculations
| Ratio |
Description |
The company |
| Estimated time elapsed since purchase |
The approximate age in years of a company's fixed assets. Useful for comparison purposes. |
Sanofi's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 exceeding 2009 level.
|
Estimated Remaining Life
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2011 Calculations
| Ratio |
Description |
The company |
| Estimated remaining life |
|
Sanofi's estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
