Property, plant and equipment

Changes in the Group’s property, plant and equipment in 2019 and 2018 were as follows:



	Farmlands		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and fittings		Bearer plants		Others		Work in progress		Total
At January 1, 2018
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
At 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	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



	Farmlands		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and fittings		Bearer plants		Others		Work in progress		Total
At December 31, 2018
Fair value for farmlands / Cost	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
Year ended December 31, 2019
Opening net book amount	780,184		16,324		188,622		205,148		232,956		6,301		50,904		1,480,439
Exchange differences	(25,205	)	(536	)	(6,846	)	(8,770	)	(9,802	)	(207	)	(3,170	)	(54,536	)
Additions	1,738		62		38,570		62,320		102,813		2,160		54,488		262,151
Revaluation surplus	(42,384	)	—		—		—		—		—		—		(42,384	)
Acquisition of subsidiaries	815		—		24,126		5,280		—		437		—		30,658
Reclassification from investment property	4,816		—		—		—		—		—		—		4,816
Transfers	—		12,643		13,614		16,772		—		35		(43,064	)	—
Disposals	—		—		(81	)	(3,308	)	—		(129	)	—		(3,518	)
Disposals of subsidiaries	(10,379	)	—		(571	)	(22	)	—		—		—		(10,972	)
Reclassification to non-income tax credits (*)	—		—		—		(226	)	—		—		—		(226	)
Depreciation	—		(3,213	)	(24,714	)	(70,921	)	(72,447	)	(1,913	)	—		(173,208	)
Closing net book amount	709,585		25,280		232,720		206,273		253,520		6,684		59,158		1,493,220
At December 31, 2019
Fair value for farmlands / Cost	709,585		44,887		413,727		791,024		573,060		23,907		59,158		2,615,348
Accumulated depreciation	—		(19,607	)	(181,007	)	(584,751	)	(319,540	)	(17,223	)	—		(1,122,128	)
Net book amount	709,585		25,280		232,720		206,273		253,520		6,684		59,158		1,493,220

(*) 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, 2019 and 2018, 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.

Farmlands are measured at Fair Value. For all farmlands with a total valuation of US$ 710 million as of December 31, 2019, 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, 2019 would have reduced the value of the farmlands on US$ 71 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, 2019 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, 2019 and 2018.

During the year ended December 31, 2019, borrowing costs of US$ 13,904 (2018: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$ 324,129 as of December 31, 2019 (2018: US$ 265,099).