Property, plant and equipment

Changes in the Group’s property, plant and equipment in 2018 and 2017 were as follows:



	Farmlands (*)		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and fittings		Bearer plants		Others		Work in progress		Total
At January 1, 2017
Cost	122,117		20,907		305,748		633,536		341,666		15,067		21,641		1,460,682
Accumulated depreciation	—		(11,267	)	(115,693	)	(382,226	)	(125,497	)	(11,132	)	—		(645,815	)
Net book amount	122,117		9,640		190,055		251,310		216,169		3,935		21,641		814,867
At December 31, 2017
Opening net book amount	122,117		9,640		190,055		251,310		216,169		3,935		21,641		814,867
Exchange differences	(11,374	)	(1,219	)	(4,473	)	(5,853	)	(4,089	)	(390	)	(2,901	)	(30,299	)
Additions	—		—		15,495		62,101		84,278		2,351		37,856		202,081
Transfers	—		2,711		12,963		11,183		—		11		(26,868	)	—
Disposals	—		—		(162	)	(3,913	)	—		(40	)	—		(4,115	)
Reclassification to non-income tax credits (**)	—		—		(205	)	(788	)	—		—		(93	)	(1,086	)
Depreciation	—		(2,125	)	(20,829	)	(67,960	)	(57,448	)	(1,709	)	—		(150,071	)
Closing net book amount	110,743		9,007		192,844		246,080		238,910		4,158		29,635		831,377



	Farmlands (*)		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and fittings		Bearer plants		Others		Work in progress		Total
At December 31, 2017
Cost	110,743		22,399		329,366		696,266		421,855		16,999		29,635		1,627,263
Accumulated depreciation	—		(13,392	)	(136,522	)	(450,186	)	(182,945	)	(12,841	)	—		(795,886	)
Net book amount	110,743		9,007		192,844		246,080		238,910		4,158		29,635		831,377
Year ended December 31, 2018
Opening net book amount	110,743		9,007		192,844		246,080		238,910		4,158		29,635		831,377
Adjustment of opening net book amount for the application of IAS 29	211,328		11,520		22,563		5,181		—		1,140		856		252,588
Exchange differences	(78,858	)	(3,310	)	(34,195	)	(49,222	)	(36,504	)	1,410		(6,408	)	(207,087	)
Additions	—		97		13,773		50,759		96,365		2,098		61,829		224,921
Revaluation surplus (Note 33)	545,129		—		—		—		—		—		—		545,129
Reclassification from investment property	3,313		—		—		—		—		—		—		3,313
Transfers	—		2,012		14,264		18,577		—		49		(34,902	)	—
Disposals	—		—		(149	)	(2,144	)	—		(85	)	(67	)	(2,445	)
Disposals of subsidiaries	(11,471	)	—		(593	)	(17	)	(1,667	)	—		—		(13,748	)
Reclassification to non-income tax credits (**)	—		—		(114	)	(422	)	—		—		(39	)	(575	)
Depreciation	—		(3,002	)	(19,771	)	(63,644	)	(64,148	)	(2,469	)	—		(153,034	)
Closing net book amount	780,184		16,324		188,622		205,148		232,956		6,301		50,904		1,480,439
At December 31, 2018
Cost of fair value	780,184		32,718		344,915		718,978		480,049		21,611		50,904		2,429,359
Accumulated depreciation	—		(16,394	)	(156,293	)	(513,830	)	(247,093	)	(15,310	)	—		(948,920	)
Net book amount	780,184		16,324		188,622		205,148		232,956		6,301		50,904		1,480,439

(*) Prior periods have been recast to reflect the Company's change in accounting policy for Investment properties as described in Note 33.

(**) Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. As of December 31, 2018 and 2017, ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) tax credits were reclassified to trade and other receivables.

Depreciation is calculated using the straight-line method to allocated their cost over the estimated usefull lives. Farmlands are not depreciated.



Farmland improvements	5-25 years
Buildings and facilities	20 years
Furniture and fittings	10 years
Computer equipment	3-5 years
Machinery and equipment	4-10 years
Vehicles	4-5 years
Bearer plants	6 years - based on productivity

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

Since September 2018 the Group changed the accounting policy for its farmlands (See Note 33 - Basis of presentation - Changes in accounting policies), adopting the valuation at Fair Value. For all farmlands with a total valuation of US$ 785 million as of December 31, 2018, the valuation was determined using sales Comparison Approach prepared by an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the price per hectare (Level 3). The Group estimated that, other factors being constant, a 10% reduction on the Sales price for the period ended December 31, 2018 would have reduced the value of the farmlands on US$ 78.5 million, which would impact, net of its tax effect on the "Revaluation surplus" item in the statement of Changes in Shareholders' Equity. If farmlands were stated on the historical cost basis, the amount as of December 31, 2018 would be US$ 235 million”.

Depreciation charges are included in “Cost of production of Biological Assets”, “Cost of production of manufactures products”, “General and administrative expenses”, “Selling expenses” and capitalized in “Property, plant and equipment” for the years ended December 31, 2018 and 2017.

During the year ended December 31, 2018, borrowing costs of US$ 12,764 (2017:US$ 3,660) were capitalized as components of the cost of acquisition or construction for qualifying assets.

Certain of the Group’s assets have been pledged as collateral to secure the Group’s borrowings and other payables. The net book value of the pledged assets amounts to US$ 349,400 as of December 31, 2018 (2017: US$ 265,099).