Depreciation carbon dating
If the asset’s book value is higher than the disposal proceeds, the difference is recognised as an impairment in the period when a binding sales contract is signed.The carrying amounts of intangible assets and property, plant and equipment are reviewed at each reporting date to determine whether there is any indication of impairment, whereas goodwill is tested annually.The recoverable amount was based on the value-in-use and amounted to EUR 233 million.The pre-tax discount rate used for impairment testing was 6.8% (7.3%).The total impairment charges on other intangible assets and property, plant and equipment in 2016 amounted to EUR 92 million (EUR 248 million) and resulted from impairment testing and restructurings.The impairments are mostly attributable to:• EUR 78 million (EUR 216 million) resulted from impairment testing in Newsprint Europe CGU in Paper division.
Impairments were calculated with a value-in-use method for each CGU based on the following main assumptions:• Sales price estimates in accordance with internal and external specialist analysis• Inflation estimates of approximately 2% per year• Current cost structure to remain unchanged• For goodwill testing a four-year future period was used after which the perpetuity value was based on zero growth rates, whereas for intangible assets, property, plant and equipment testing the period was the remaining expected economic life of the assets.
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The result is explained in more detail in the following paragraphs.• EUR 6 million for idle machinery relating to the consolidation of corrugated packaging production in Finland.
Newsprint Europe CGU in Paper division was tested for impairment in 2016 due to the further weakened long-term earnings expectations resulting from decline in the European paper markets.