annual report - Hypo Real Estate Holding AG

Group Accounts
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to write-down
their cost to their residual values over their estimated useful lives, as follows:
Estimated useful life, in years
Buildings 50
IT-equipment 3
Furniture, fixtures and office equipment 5
Machinery and equipment 5
Vehicle fleet 5
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value less
costs to sell and value in use.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised
in the income statement.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired entity at the date of acquisition. Goodwill on acquisitions of subsidiaries is included
in “intangible assets”. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal
of an entity include the carrying amount of goodwill relating to the entity sold.
(b) Computer software
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised on a straight line basis based on their expected useful lives (three
years).
Leases
The leases entered into by the Group are operating leases. The total payments made under operating leases are
charged to the income statement on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to
the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
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