G14 Property, plant and equipment

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	Land and buildings	Plant and machinery	Equipment, tools, fixtures and fittings	Construction in progress	Total
Cost
At January 1, 2019	17,418	42,067	6,591	2,786	68,862
Additions	208	1,692	349	2,082	4,332
Business combinations	4	178	14	–	196
Divestments and disposals	–430	–1,975	–479	–130	–3,013
Reclassifications	127	570	280	–2,105	–1,128
Translation differences for the year	278	637	109	24	1,048
At December 31, 2019	17,605	43,169	6,865	2,657	70,296

Accumulated depreciations and impairment losses
At January 1, 2019	8,330	30,188	5,012	–	43,529
Business combinations	1	104	10	–	115
Divestments and disposals	–339	–1,740	–439	–	–2,518
Impairment losses	25	310	1	–	335
Reversal of impairment losses	–15	–14	–	–	–29
Reclassifications	–80	–928	10	–	–997
Depreciation for the year	545	2,575	435	–	3,554
Translation differences for the year	127	452	84	–	664
At December 31, 2019	8,593	30,947	5,113	–	44,653

Net carrying amounts
At December 31, 2019	9,012	12,222	1,752	2,657	25,643

Cost
At January 1, 2020	17,605	43,169	6,865	2,657	70,296
Additions	251	1,364	221	1,739	3,576
Business combinations	27	357	39	2	425
Divestments and disposals	–282	–1,706	–356	–151	–2,495
Reclassifications	307	431	82	–1,665	–845
Translation differences for the year	–815	–1,984	–331	–124	–3,254
At December 31, 2020	17,093	41,631	6,520	2,458	67,702

Accumulated amortization and impairment losses
At January1, 2020	8,593	30,947	5,113	–	44,653
Business combinations	9	188	26	–	223
Divestments and disposals	–201	–1,420	–338	–	–1,959
Impairment losses	122	94	5	–	222
Reversal of impairment losses	–45	–65	–	–	–111
Reclassifications	–7	–566	–91	–	–665
Depreciation for the year	542	2,473	426	–	3,442
Translation differences for the year	–396	–1,435	–248	–	–2,079
At December 31, 2020	8,616	30,217	4,894	–	43,727

Net carrying amount
At 31 December 31, 2020	8,477	11,414	1,626	2,458	23,975

Impairment losses/reversal of impairment losses per line in the income statement

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	2019	2020
Cost of sales	–306	9
Administrative expenses	0	–96
Research & development	0	–25
Total	–306	–112

Impairment tests

Property, plant and equipment with a definite useful life were tested for impairment when an indication for impairment was identified. The tests resulted in impairment losses of SEK 112 million (306).

Additional information

Items of property, plant and equipment totaling SEK 225 million (234) have been pledged as security for liabilities. In 2020, contractual commitments for the acquisition of property, plant and equipment amounted to SEK 265 million (385).

Accounting principles

Owned assets

Property, plant and equipment are recognized at cost less accumulated depreciation and any impairment losses.

Depreciation of property, plant and equipment

Property, plant and equipment are depreciated over their estimated useful lives. Land is not depreciated. Depreciation is recognized on a straight-line basis (unless otherwise described) based on the cost of the assets, adjusted by residual value when applicable, and estimated useful lives. The following depreciation periods are applied.

Land and buildings:

Land indefinite useful life
Buildings 10–50 years
Site improvements 20 years

Plant and machinery:

Plant and machinery 5–10 years
Rental assets 3 years

Equipment, tools, fixtures and fittings:

Depreciated over the estimated useful lives.
Computer equipment is depreciated over 3–5 years using the reducing balance method

If an item of property, plant and equipment comprises components with different useful lives, each such significant component is depreciated separately. Depreciation methods and estimated residual values and useful lives are reviewed at each year-end.

Impairment and reversals of impairment

Impairment and reversals of impairment is applicable also for property, plant and equipment. For details see section in note G13.

Borrowing costs

For definition of borrowing costs see section in intangible assets note G13. The capitalization of borrowing costs relating to tangibles is mainly relevant for the construction of production buildings on a proprietary basis.

Critical estimates and key judgments

Impairment tests of non-current assets

Sandvik’s tangible assets are stated at cost less accumulated depreciation and any impairment losses. The assets are depreciated over their estimated useful lives to their estimated residual values. Both the estimated useful life and the residual value are reviewed at least at each financial year-end.

The carrying amount of the Group’s non-current assets is tested for impairment whenever events or changes in circumstances indicate that the carrying amount will not be recovered. The rental fleets of Sandvik Mining and Rock Technology are subject to special examination considering their dependence on the business climate in the mining- and oil industry and the risk that rental agreements may be canceled. The carrying amount of the rental fleets at the end of 2020 was SEK 983 million (1,071).

A call for an impairment test also arises when a non-current asset is classified as being held for sale, at which time it must be remeasured at the lower of its carrying amount and fair value less costs to sell.