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## 11. Property, plant and equipment (cont’d) 

## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

(RMB AND US$ AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA) 

An impairment loss of Rmb 9,163 (US$1,497) (2012: Rmb 8,026; 2011: Rmb 252) was charged to the consolidated statement of profit or loss under “Cost of sales” and “Selling, distribution and administrative costs” for the Group’s property, plant and equipment within the Yuchai segment. The impairment loss for 2012 and 2013 was due to assets that were not in use. 

As of December 31, 2013, construction in progress with a carrying amount of Rmb 6.5 million (US$1.1 million) (2012: Rmb 42.3 million) are pledged to secure bank facilities. 

## Capitalized borrowing costs 

The amount of borrowing costs capitalized during the year ended December 31, 2013 was Rmb 27,394 (US$4,476) (2012: Rmb 33,338). The rate used to determine the amount of borrowing costs eligible for capitalization was 5.56% (2012: 5.61%) which is the effective interest rate of the specific and any applicable general borrowings that is used for the purpose of obtaining the qualifying assets. 

## Finance leases 

The carrying value of property, plant and equipment held under finance leases at December 31, 2013 was Rmb 52 (2012: Rmb Nil). Additions during the year include Rmb 75 (2012: Rmb Nil) of property, plant and equipment under finance leases. Leased assets will be returned to lessor at the end of the lease term. 

## 12. Prepaid operating leases 

Yuchai and its subsidiaries are granted the land use rights of 15 to 50 years in respect of such land. Prepaid operating leases represent those amounts paid for land use rights to the PRC government. The prepaid operating leases charged to expense were Rmb 13,148 and Rmb 11,829 (US$1,933) for the years ended December 31, 2012 and 2013, respectively. 

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