15 PROPERTY AND EQUIPMENT

The following table summarizes the movement in property and equipment for the years ended December 31:

	Telecommunications equipment			Land, buildings and constructions			Office and other equipment			Equipment not installed and assets under construction			Total
Cost
As of January 1, 2016		10,068			423			1,113			919			12,523
Acquisition (Note 5)		116			10			39			34			199
Additions		62			7			21			1,322			1,412
Disposals		(444	)		(9	)		(33	)		(22	)		(508	)
Transfer		1,153			9			52			(1,214	)		—
Translation adjustment		1,137			21			127			(53	)		1,232

As of December 31, 2016		12,092			461			1,319			986			14,858
Reclassified to assets held for sale (Note 5)		(662	)		(1	)		(5	)		(7	)		(675	)
Additions		39			14			26			1,194			1,273
Disposals		(671	)		(5	)		(49	)		(19	)		(744	)
Transfer		1,426			15			164			(1,605	)		—
Translation adjustment		(284	)		(2	)		24			(37	)		(299	)

As of December 31, 2017		11,940			482			1,479			512			14,413


Accumulated depreciation and impairment
As of January 1, 2016		(5,221	)		(179	)		(688	)		(196	)		(6,284	)
Transfer		(17	)		(1	)		21			(3	)		—
Depreciation charge for the year		(1,266	)		(33	)		(140	)		—			(1,439	)
Disposals		415			6			29			14			464
Impairment		(65	)		(2	)		(6	)		(27	)		(100	)
Translation adjustment		(772	)		(9	)		(79	)		80			(780	)

As of December 31, 2016		(6,926	)		(218	)		(863	))		(132	)		(8,139	)
Reclassified to assets held for sale (Note 5)		478			—			3			1			482
Transfer		14			1			(17	)		2			—
Depreciation charge for the year		(1,270	)		(32	)		(152	)		—			(1,454	)
Disposals		635			5			42			13			695
Impairment		(5	)		—			—			(10	)		(15	)
Translation adjustment		131			2			(22	)		4			115

As of December 31, 2017		(6,943	)		(242	)		(1,009	)		(122	)		(8,316	)


Net book value
As of January 1, 2016		4,847			244			425			723			6,239
As of December 31, 2016		5,166			243			456			854			6,719
As of December 31, 2017		4,997			240			470			390			6,097

Non-cash investing activities

In 2017, VEON acquired property and equipment in the amount of US$441 (2016: US$699), which was not paid for as of respective year end.

Changes in estimates

During 2017, there were no other material change in estimates related to property and equipment other than the impairment described in Note 10 of US$15 (2016: US$100), and accelerated depreciation in Pakistan, Ukraine and Bangladesh pertaining to network modernization activities US$74 (2016: US$153).

Additional information

Property and equipment pledged as security for bank borrowings amounts to US$875 as of December 31, 2017 (2016: US$1,029), and primarily relate to securities for borrowings of PMCL (refer to Note 17 for details regarding amounts borrowed).

During 2017, VEON capitalized interest in the cost of property and equipment in the amount of US$3 (2016: US$5). In 2017, the capitalization rate was 8.3% (2016: 10.3%).

ACCOUNTING POLICIES

Property and equipment is stated at cost, net of any accumulated depreciation and accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Class of property and equipment		Useful life
Telecommunication equipment		3 - 20 years
Buildings and constructions		10 - 50 years
Office and other equipment		3 - 10 years

Each asset's residual value, useful life and method of depreciation is reviewed at the end of each financial year and adjusted prospectively, if necessary.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time (longer than six months) to get ready for its intended use are capitalized as part of the cost of the respective qualifying assets. All other borrowing costs are expensed in the period incurred.

SOURCE OF ESTIMATION UNCERTAINTY

Depreciation and amortization of non-current assets

Depreciation and amortization expenses are based on management estimates of useful life, residual value and amortization method of property and equipment and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the amortization or depreciation charges. Technological developments are difficult to predict and our views on the trends and pace of development may change over time. Some of the assets and technologies, in which the Group invested several years ago, are still in use and provide the basis for new technologies.

The useful lives of property and equipment and intangible assets are reviewed at least annually, taking into consideration the factors mentioned above and all other relevant factors. Estimated useful lives for similar types of assets may vary between different entities in the Group due to local factors such as growth rate, maturity of the market, historical and expected replacements or transfer of assets and quality of components used.