2012 Annual Report - Italcementi Group

Operating lease payments are recognized as expense on a straight-line basis over the lease term.
1.8. Investment property
Investment property is land and/or buildings held to earn rental income and/or for capital appreciation, rather
than for use in the production or supply of goods and services. Investment property is initially recognized at
purchase cost, including costs directly attributable to the purchase. Subsequent to initial recognition,
investment property is measured at amortized cost, based on the asset’s useful life less any impairment
losses.
1.9. Goodwill
Goodwill recognized in accordance with IFRS 3 revised is allocated to the cash-generating units that are
expected to benefit from the synergies created by the acquisition. Goodwill is stated at the original value less
any impairment losses identified as a result of tests conducted on an annual basis or more frequently if
indications of impairment emerge.
When goodwill is allocated to a cash-generating unit part of whose assets are disposed of, the goodwill
associated with the sold assets is taken into account when determining the gain or loss arising from the
transaction.
1.10. Intangible assets
Intangible assets purchased separately are capitalized at cost, while those acquired through business
combinations are recognized at provisionally estimated fair value at the acquisition date and adjusted where
necessary within the following twelve months.
Subsequent to initial recognition, intangible assets are carried at cost amortized over asset’s useful life.
Other than goodwill, the Group has not identified intangible assets with an indefinite useful life.
1.11. Impairment
Goodwill is systematically tested for impairment on an annual basis or more frequently if indications of
impairment emerge.
Property, plant and equipment and investment property, and amortizable intangible assets, are tested for
recoverability if indications of impairment emerge.
Impairment is the difference between the asset net carrying amount and its recoverable amount. Recoverable
amount is the greater of fair value, less costs to sell, of an asset or cash-generating unit, and its value in use,
determined as the present value of future cash flows. Fair value less costs to sell is determined through
application of relevant valuation models adopting appropriate income multipliers, quoted share prices on an
active market for similar enterprises, comparable transactions on similar assets or other available fair value
indicators applicable to the assets being measured.
In determining value in use, assets are measured at the level of cash-generating units on the basis of their
operating attribution. Estimated future cash flows are discounted at a rate determined for each cash-generating
unit using the weighted average cost of capital method (WACC).
If an impairment loss on an asset other than goodwill subsequently reverses in full or in part, the asset carrying
amount is increased to reflect the new estimated recoverable amount, which may not exceed the amount that
would have been reflected in the absence of the impairment loss. Impairment losses and reversals of
impairment losses are taken to the income statement.
Impairment losses on goodwill cannot be reversed.
78