Caribbean Utilities Company, Ltd.  2011  Annual Report Notes to Financial Statements 35 (Expressed in thousands of United States dollars) been billed. Electricity consumed but not yet billed to customers are estimated and accrued as unbilled revenue at each period end. CUC passes through 100% of fuel costs to consumers on a two-month lag basis this is recorded as Fuel Factor Revenues. Kilowatt-hour sales throughout the month are based on meter readings that establish electricity consumption since the last meter reading. The kWh accrual for the period is based on estimated electricity sales to customers since the last meter reading. Cash and cash equivalents comprise cash on hand, bank demand deposits and bank fixed deposits maturing within three months of the date of acquisition. At December 31, 2011, cash and cash equivalents consisted of all cash. Accounts receivable are included in the balance sheet net of the allowance for doubtful accounts. Insurance receivables are recorded when recovery becomes reasonably assured. Fuel and lube oil are carried at cost. Line inventory is carried at cost less provision for obsolescence. Inventories are consumed/utilised on an average cost basis. Inventories are valued at lower of cost and net realisable value. PP&E are stated at cost. The cost of additions to PP&E is the original cost of contracted services, direct labour and related overheads, materials, GEC and AFUDC. Line inventory that is foreseeable as capitalisable is included in PP&E less provision for obsolescence. Major spare parts and stand-by equipment to be used during more than one period qualify as PP&E. Similarly, if the spare parts and servicing equipment can be used only in connection with an item of PP&E, they are accounted for as PP&E. Damaged PP&E are written off, or appropriate provision made, where damage relates to assets that will be reconstructed. The Company capitalises certain overhead costs not directly attributable to specific PP&E but which do relate to the overall capital expenditure programme GEC. Per the Licence agreements these costs may not exceed 10% of non-fuel operating costs. In the absence of regulation, only those overhead costs directly attributable to construction activity would be capitalised under Canadian GAAP. Additionally, the Company capitalises an AFUDC, which represents the cost of debt and  equity financing incurred during construction of PP&E. In the absence of rate regulation, this cost of equity financing would not be capitalised under Canadian GAAP. Upon disposition of PP&E the original cost will be removed from the PP&E accounts, that amount net of salvage proceeds will also be removed from accumulated depreciation, as such, any resulting gain or loss will be charged to accumulated depreciation. In the absence of rate regulation, these gains or losses would be recognised as such upon disposition. Depreciation is provided on the cost of PP&E, except for freehold land, capitalised projects in progress, line inventory and spare parts which is not depreciated, on a straight-line basis over the estimated useful lives of the assets as follows: Depreciation, by its very nature is an estimate based primarily on the estimated useful life of the asset. Estimated useful lives are based on current facts and historical information and take into consideration the anticipated physical life of the assets. Property, Plant and Equipment Depreciation Property, Plant and Equipment Inventories Accounts Receivable Cash and Cash Equivalents Kilowatt-hour Sales Years Transmission and distribution  20 to 50  Generation  Other: Buildings  20 to 50 Motor Vehicles  5 to 15 Equipment and computers  3 to 20