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7.2.1 Depreciation, liquidation and write-downs

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7.1 Sales revenue

7.2 Expenses by kind and function

SIGNIFICANT ACCOUNTING PRINCIPLES
Cost of goods sold
Cost of goods sold includes the following: the costs of manufacturing
  • products incurred in a given reporting period, adjusted by a change in the
    inventories (finished goods, semi-finished products and work in progress) and
    adjusted by the cost of manufacturing products for the Company’s own purposes,

  • the value of electricity, goods and materials sold at purchase price,

  • changes in the fair
    value measurements of financial instruments related to lignite measured at fair
    value, and changes in the measurement of lignite inventories measured at fair
    value..
The costs of generation that can be allocated directly to revenue achieved by entities influence the Group’s financial result for the reporting period in which such revenue occurs.
The costs of generation that can be allocated only indirectly to revenue or other benefits achieved by the Group influence its financial result in the part in which they relate to a given reporting period, ensuring that they are commensurate with revenue or other economic benefits.


Year ended
31 December 2023		 Year ended
31 December 2022
EXPENSES BY KIND

Depreciation and write-downs 13,501 4,371
Consumption of materials and energy 13,693 11,348
Third party services 4,695 2,787
Taxes and charges 32,743 23,278
Employee benefits expenses 7,462 6,092
Other expenses by kind 514 436
TOTAL COSTS BY TYPE 72,608 48,312
Change in products (39) (7)
Cost of services for entity’s own needs (1,318) (689)
Distribution and selling expenses (8,151) (2,012)
General and administrative expenses (1,853) (1,382)
Value of goods and materials sold 26,314 23,472
COST OF GOODS SOLD 87,561 67,694

As presented in note 7.2.1 to these financial statements, in 2023, as a result of the performed impairment tests, the Group recognised impairment write-downs of property, plant and equipment in the amount of PLN 8,446 million in line “Depreciation and write-downs”. The increase in selling and distribution costs is due to the recognition of a contribution to the PDP Fund of PLN 6,569 million.