SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank Notes to the Consolidated Financial Statements F-29
Annual Report 2010 on Form 20-F 01 – Significant Accounting Policies
Offsetting Financial Instruments
Financial assets and liabilities are offset, with the net amount presented in the consolidated balance sheet, only
if the Group holds a currently enforceable legal right to set off the recognized amounts, and there is an intention
to settle on a net basis or to realize an asset and settle the liability simultaneously. In all other situations they
are presented gross. When financial assets and financial liabilities are offset in the consolidated balance sheet,
the associated income and expense items will also be offset in the consolidated statement of income, unless
specifically prohibited by an applicable accounting standard.
Property and Equipment
Property and equipment includes own-use properties, leasehold improvements, furniture and equipment and
software (operating systems only). Own-use properties are carried at cost less accumulated depreciation and
accumulated impairment losses. Depreciation is generally recognized using the straight-line method over the
estimated useful lives of the assets. The range of estimated useful lives is 25 to 50 years for property and 3 to
10 years for furniture and equipment. Leasehold improvements are capitalized and subsequently depreciated
on a straight-line basis over the shorter of the term of the lease and the estimated useful life of the improvement,
which generally ranges from 3 to 10 years. Depreciation of property and equipment is included in general and
administrative expenses. Maintenance and repairs are also charged to general and administrative expenses.
Gains and losses on disposals are included in other income.
Property and equipment are tested for impairment at least annually and an impairment charge is recorded to
the extent the recoverable amount, which is the higher of fair value less costs to sell and value in use, is less
than its carrying amount. Value in use is the present value of the future cash flows expected to be derived from
the asset. After the recognition of impairment of an asset, the depreciation charge is adjusted in future periods
to reflect the asset’s revised carrying amount. If an impairment is later reversed, the depreciation charge is
adjusted prospectively.
Properties leased under a finance lease are capitalized as assets in property and equipment and depreciated
over the terms of the leases.
Investment Property
The Group generally uses the cost model for valuation of investment property, and the carrying value is included
on the consolidated balance sheet in other assets. When the Group issues liabilities that are backed by investment
property, which pay a return linked directly to the fair value of, or returns from, specified investment
property assets, it has elected to apply the fair value model to those specific investment property assets. The
Group engages, as appropriate, external real estate experts to determine the fair value of the investment
property by using recognized valuation techniques. In cases in which prices of recent market transactions of
comparable properties are available, fair value is determined by reference to these transactions.