| 2.11 | Property, plant and equipment for own use |
Property, plant and equipment include the assets, owned or under financial leases held by Grupo Aval for current or future use and which expects to be used for more than one period.
They are recognized in the consolidated statement of financial position at their acquisition or construction cost, less the corresponding accumulated depreciation and, if applicable, the estimated impairment losses resulting from comparing the carrying amount of each asset with its recoverable value.
Depreciation is calculated by applying the straight-line method over the acquisition cost of the assets, less any residual value; land is not depreciated.
Depreciation is estimated on a straight-line basis during the estimated useful life of the asset. The annual depreciation rates for each item of assets are:
| Asset | | Useful Life |
| Own use buildings | | According to appraisals without exceeding 70 years |
| Equipment, furniture and accessories | | From 3 to 10 years |
| Machinery and equipment | | From 5 to 25 years |
| Computer equipment | | From 3 to 12 years |
| Vehicles | | From 5 to 10 years |
| Bearer plants | | From 25 to 35 years |
Conservation and maintenance expense is recognized as incurred as “Administrative Expense”.
According to the changes in accounting policies discussed in 2.15 below, the biological assets that meet the definition of bearer plants are accounted for as property, plant and equipment.
A bearer plant is a live plant that meets the following requirements:
| a) | It is used for the manufacturing or supply of agricultural products; |
| b) | It is expected to produce for more than one period; and |
| c) | It has a remote probability of being sold as an agricultural product, except for irregular sales related to thinning and trimming. |
Bearer plants that are under the set-up and growing phase are subject to a biological transformation which should be reflected through cost accumulation until they reach their maturity level. In the case of the African oil palm maturity is reached in the second year, while for rubber maturity is reached in the seventh year. After reaching their maturity bearer plants are considered developed and the future economic benefits arise from the sale of the fruit produced during the life of the plant.
Bearer plants are measured at their cost less accumulated depreciation and any impairment losses. The useful life is equal to the plants´ production periods. The useful life of the rubber plant is 35 years while the useful life of the African oil palm is 25 years. The depreciation method used is the estimated production units as it accurately reflects the use of the assets. If the bearer plant is sold for timber at the end of the useful life the value received is considered the residual value of the asset.
