Cloudberry Clean Energy Annual report 2020

Cloudberry Annual report 2020 Financial statements 74 personnel expense over the duration period, at the same time a corresponding increase in paid in equity is recognised. On each balance date, the Group revises its estimates of the number of warrants that are expected to be exercisable. Any adjustments will be recognised in the income statement and corresponding adjustment to equity. Employer tax is recognised in the profit and loss statement and a provision is recognised in the balance sheet. Inventory Cloudberry inventories consist of development pro- jects and government grants of el-certificates and guarantees of origin. Inventories are accounted for in accordance with IAS 2 Inventories. According to IAS 2 inventories are measured at the lower of cost and net realisable value. The develop projects are part of the Develop business segment and are mainly held for trading. In some cases, when a project is ready to build, Cloudberry decides to keep the project to build and own a producing power plant. When Cloudberry makes the final investment decision (FID), the project will be reclassified from inventory to property plant and equipment and power plant under construction. At the same time the ownership of the project will be transferred from Cloudberry Develop to Cloudberry Production and owned/managed in this business area. Property, plant and equipment (PPE) Property, plant, and equipment is measured at historical cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated. The initial cost of a PPE asset comprises its pur- chase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of asset retirement obligation if any, and for qualifying assets, borrowing costs incurred in the construction period. Subsequent costs are included in the asset’s carrying amount or recog- nised as a separate asset, as appropriate, only when it is probable that future economic benefits associ- ated with the item will flow to the group and the cost of the item can be measured reliably. All repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. If a separate component is damaged and replaced, the component is derecognised and the carrying amount is charged to the profit and loss statement as an impairment loss in the period. The replacement component is capitalized as a new item of PPE. Each component of an item of property plant and equipment with a cost that is significantly in relation to the total cost of the item is depreciated sepa- rately. Depreciation is calculated using the straight- line method to allocate costs over their estimated useful lives. Depreciation of hydro and wind power plants commences when the plant is ready for managements intended use, normally at the date of the grid connection and commissioning. The depreciation period is adapted to the duration of the landowner contract period. The assets’ residual values and useful lives are reviewed annually and adjusted if appropriate. Gains and losses on disposals are determined by compar- ing actual proceeds with the carrying amount. Gains and losses on disposal are included in profit or loss. Capitalisation of borrowing costs Capitalisation of borrowing costs commence when the activities to prepare the asset for its intended use are undertaken and continue to be capitalized until the date in which the development of the relevant asset is complete. All other borrowing costs are recognised in the profit and loss statement in the period which they incur. Asset retirement obligation When Cloudberry is obligated to remove an item of property, plant and equipment as well as to restore the site at the date when the operation ceases, an estimate of the asset retirement obligation (decom- missioning obligation) is recognized. The obligation is best estimate of the net present value of the costs that will occur at the closing date. The asset retire- ment obligation is capitalized as part of the carrying value of the power plant and depreciated over the useful life. For now, in Cloudberry, only wind power assets that have recognised this obligation. Intangible assets Intangible assets acquired separately are carried at cost less accumulated amortisation and accumu- lated impairment losses. Costs relating to intangible assets, including goodwill, are recognised in the statement of financial position when it is probable that the asset will generate future economic bene- fits and the costs can be measured reliably.