annual financial statement 2011 - conwert Immobilien Invest SE

CONWERT IMMOBILIEN INVEST SE
ANNUAL FINANCIAL 2011 STATEMENT ANNUAL REPORT 2011
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2.4.2. BUSINESS COMBINATIONS AND GOODWILL
The acquisition of subsidiaries and business operations is accounted for using the purchase method.
This method includes the recognition of identifiable assets (including intangible assets not previously
recognised) and liabilities (including contingent liabilities, but excluding future restructuring
costs) in the acquired entity at fair value. The cost of a business combination represents the total
compensation transferred, measured at fair value on the acquisition date, and any non-controlling
interests in the acquired company. The costs incurred for a business combination are recognised
as expenses and reported as transaction costs.
The goodwill arising from a business combination is initially recognised at cost, which equals the
excess of the compensation transferred and the amount of any non-controlling interests over the
identifiable assets acquired and liabilities assumed by the Group. If this compensation is less than
the fair value of the net assets in the acquired subsidiary, the difference is recognised to profit or
loss.
The subsequent measurement of goodwill reflects cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated
– beginning on the acquisition date – to the cash-generating units or group of cash-generating
units that is expected to benefit from the synergies of the business combination. This allocation is
made regardless of whether other assets or liabilities from the acquired company are assigned to
this cash-generating unit or group of cash-generating units. Additional details on this subject are
provided in note 8.2.
2.4.3. INTANGIBLE ASSETS
Intangible assets acquired separately are initially recognised at purchase or production cost. The
cost of intangible assets acquired in a business combination reflects fair value as of the date of
acquisition. Intangible assets are measured in subsequent periods at purchase or production cost
less accumulated amortisation and any accumulated impairment losses. Amortisation is based on
the useful economic life of the asset. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least annually at the end of the financial
year. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the intangible asset are reflected in a change in the amortisation period
and/or the amortisation method, and are treated as changes in accounting estimates. The amortisation
expense for intangible assets with finite useful lives is recognised to profit or loss under
the position “depreciation, amortisation and other impairment charges” that reflects the function
of the asset. Gains or losses arising from the derecognition of intangible assets are measured as
the difference between the net disposal proceeds and the carrying amount of the asset, and are recognised
to profit or loss in the period the asset is derecognised. Additional details on this subject
are contained in note 8.2.
Scheduled, straight-line amortisation is based on the following useful lives:
Software: 3 years
Customer relationships and management contracts: 5 – 11 years