G14 Property, plant and equipment

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	Land and buildings	Plant and machinery	Rental fleet	Equipment, tools, fixtures and fittings	Construction in progress	Total
Cost
At January 1, 2020	17,605	40,827	2,342	6,865	2,657	70,296
Additions	251	480	884	221	1,739	3,576
Business combinations	27	357	0	39	2	425
Divestments and disposals	–282	–1,156	–550	–356	–151	–2,495
Reclassifications	307	900	–469	82	–1,665	–845
Translation differences	–815	–1,755	–229	–331	–124	–3,254
At December 31, 2020	17,093	39,652	1,979	6,520	2,458	67,702

Accumulated depreciations and impairment losses
At January 1, 2020	8,593	29,638	1,309	5,113	–	44,653
Business combinations	9	188	0	26	–	223
Divestments and disposals	–201	–1,031	–389	–338	–	–1,959
Impairment losses	122	94	0	5	–	222
Reversal of impairment losses	–45	–63	–2	–	–	–111
Reclassifications	–7	–250	–317	–91	–	–665
Depreciation	542	1,950	523	426	–	3,442
Translation differences for the year	–396	–1,307	–128	–248	–	–2,079
At December 31, 2020	8,616	29,221	996	4,894	–	43,727

Net carrying amount
At December 31, 2020	8,477	10,431	983	1,626	2,458	23,975

Cost
At January 1, 2021	17,093	39,652	1,979	6,520	2,458	67,702
Additions	204	512	941	238	1,982	3,877
Business combinations	485	1,009	0	133	96	1,724
Divestments and disposals	–729	–1,466	–647	–360	–71	–3,273
Reclassifications	65	965	–120	305	–1,778	–562
Translation differences	610	1,297	136	192	98	2,333
At December 31, 2021	17,728	41,968	2,288	7,029	2,787	71,801

Accumulated depreciations and impairment losses
At January 1, 2021	8,616	29,221	996	4,894	–	43,727
Divestments and disposals	–550	–1,314	–412	–341	–	–2,617
Impairment losses	0	18	0	0	–	18
Reversal of impairment losses	–6	–126	0	–1	–	–133
Reclassifications	–84	–91	–69	9	–	–234
Depreciation for the year	519	1,943	562	441	–	3,464
Translation differences	301	971	78	148	–	1,499
At December 31, 2021	8,796	30,623	1,155	5,150	–	45,724

Net carrying amount
At December 31, 2021	8,932	11,345	1,133	1,879	2,787	26,076

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

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	2020	2021
Cost of goods and services sold	9	108
Administrative expenses	–96	0
Research and development expenses	–25	7
Total	–112	116

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 gain of SEK 116 million (–112) as a result of reversals of impairments in projects.

Additional information

Items of property, plant and equipment totaling SEK 230 million (225) have been pledged as security for liabilities. In 2021, contractual commitments for the acquisition of property, plant and equipment amounted to SEK 409 million (265).

Accounting principles

Owned assets

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

Rental fleet

The fleet is balanced between Underground Drills, Loaders and Trucks followed by Surface Drills. The largest fleets are based in Northern Europe, Canada, US and Australia.

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 5–15 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 Solutions 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 2021 was SEK 1,133 million (983).

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.