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J Intangible assets
Computer software and licences
Acquired computer software and licences are capitalized
on the basis of the costs incurred to acquire and bring
to use the specific software. These costs are amortized
over the asset’s estimated useful life of five years.
Brands
Costs incurred in depositing the Group’s name and
logo and obtaining their exclusive use worldwide are
classified as brands and are shown at historical cost.
Brands have a definite useful life and are carried at cost
less accumulated amortization. Amortization is
calculated using the straight-line method to allocate
the costs over the asset’s estimated useful life of
three years.
In-process research and development
In-process research and development (“IPR&D”)
projects acquired in a business combination are capitalized
as intangible assets if the project meets the
defin ition of an asset and its fair value can be measured
reliably. Expenditure incurred on each project after
acquisition is accounted for in accordance with the
policy stated for internally incurred research and
development costs. Before the achievement of the
corresponding market authorization IPR&D are
tested annually for impairment. When selling approval
has been obtained, the projects are reclassified to
developed technologies with the subsequent commencement
of the amortization process.
K Impairment of non-current assets
Assets that are subject to amortization are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the
amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs to sell and
value in use.
L Investments
The Group classifies its investments in the following
categories: financial assets at fair value through
profit or loss, loans and receivables, held-to-maturity
investments, and available-for-sale financial assets.
The classification depends on the purpose for which
the investments were acquired. Management determines
the classification of its investments at initial
recognition and re-evaluates this designation at
each reporting date.
In December 2006, the Board of Directors approved an
investment policy which foresees that “all investments
in financial instruments by the Company shall be for
capital preservation purposes, aimed at safeguarding its
capital, reserves and liquidity until the funds are used
in the Company’s primary business”. It is also stated
that “any investment in derivative financial instruments
shall need to be previously authorized by the
Company’s Board of Directors”.
M Inventories
Inventories are stated at the lower of cost and net
realizable value. Net realizable value is the estimated
market price less applicable variable selling expenses.
Inventories consist of drug substances used for testing
and experiments.
N Trade and other receivables
Trade and other receivables are recognized initially at
fair value. A provision for impairment of trade and
other receivables is established when there is objective
evidence that the Group will not be able to collect all
the amounts due according to the original terms of
receivables. The amount of the provision is the difference
between the asset’s carrying amount and the
present value of estimated future cash flows, discounted
at the effective interest rate. The amount of the provision
is recognized in the income statement.
O Cash and cash equivalents
Cash and cash equivalents include cash in hand,
deposits held at call with banks and other short-term
highly liquid investments with original maturities of
three months or less.
Notes to the Consolidated Financial Statements – Newron Annual Report 2011 4 9