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Part 3 - Financial statements
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liabilities and contingent liabilities recognized. The initial
accounting for business combinations is not restated.
Any adjustments to the consideration transferred
in these business combinations changes their initial
accounting and leads to a matching adjustment to
goodwill.
b. Business combinations carried out after
1 January 2010
Goodwill is measured as the excess of the aggregate of:
(i) the consideration transferred;
(ii) the amount of any non-controlling interests
in the acquiree; and
(iii) in a business combination achieved in stages, the
acquisition-date fair value of the previously held
equity interest in the acquiree;
over the net of the acquisition-date fair values of the
identifiable assets acquired and the liabilities assumed.
Goodwill recognized on the acquisition date is not
subsequently adjusted.
Measurement of goodwill
Goodwill is not depreciated but it is tested for impairment
at least once a year. Any impairment loss is charged to
the income statement. An impairment loss accounted
for on goodwill cannot be reversed at a later date.
At the time of the sale of a subsidiary or a jointly
controlled entity, the relevant goodwill is included in the
determination of the result of the sale. Goodwill on
associated companies is presented under ‘Investments
In Associated Companies’.
3.4.2 Tangible Assets
An item of property, plant and equipment is recognized
as a tangible asset if it is probable that the future
economic benefits attributable to the asset will flow to
the Group and if their costs can be measured reliably.
After the initial accounting, all tangible assets are
stated at cost less the accumulated depreciation and
impairment losses. The cost includes all the costs
directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating
in the intended manner.
Repair and maintenance costs and other subsequent
expenditure linked to an asset are charged as expenses
in the income statement of the financial year during
which they are incurred.
The depreciable amount of an asset is allocated
systematically over its useful life using the straight-line
method. The depreciation of an asset begins when it is
available for use. The estimated useful lives of the most
significant elements of tangible assets are as follows:
Description
Land
Administrative buildings
Industrial buildings
Machines
EDP equipment
Other equipment
Leasehold Improvements
Tools
Furniture
Vehicles
Useful live
No depreciation
33 years
33 years
10 years
4 years
10 years
10 years
4 years
10 years
4 years
Depreciation charges are posted to operating expenses
by reference to the function of the underlying assets
(cost of sales, selling & marketing expenses, general and
administration costs, research and development costs).
Gains or losses arising from the sale or disposal of
tangible assets are determined as the difference
between the sale proceeds and the carrying amount
of the asset and are charged to the income statement
under ‘Other Operating Income / (Expenses)’.
The Group has elected to use the cost model for the
measurement of property, plant and equipment. Therefore
items of property plant and equipment may not be carried
at a re-valued amount after their initial recognition.
Impairment of Tangible and Intangible Assets
Except for intangible assets in progress that are tested
for impairment annually, tangible and intangible assets
are subject to an impairment test only when there is
an indication that their carrying amount exceeds their
recoverable amount.
If an asset does not generate cash flows independently
of those of other assets, the Group makes an estimate
of the recoverable value of the cash-generating unit to
which the asset belongs. The recoverable value is the
highest value between the fair value less costs to sell
and the value in use. If the recoverable value of an
asset (cash flow generating unit) is lower than its
carrying amount, an impairment loss is immediately
recognized as an expense in the income statement
either in “Other Operating Expenses” or in impairment
loss on non-current assets.
When an impairment is reversed at a later date, the
carrying amount of the asset (cash flow generating unit)
is increased to the revised estimate of its recoverable