COMMERZBANK AKTIENGESELLSCHAFT

Group Financial Statements
280
224 Commerzbank Annual Report 2011
(15) Intangible assets
Intangible assets mainly consist of software, acquired brand
names, customer relationships and goodwill. They are
recognised at amortised cost. Due to their finite useful economic
lives software and customer relationships are written off on a
straight line basis over their prospective useful lives. In the case
of brands and brand names our assumption is that they can
generate cash flows indefinitely. As a result brand names and
goodwill with indefinite useful economic lives are tested for
impairment at least once a year.
Impairment test methodology
All goodwill and brand names are allocated to the cashgenerating
units at the time of acquisition. Commerzbank has
defined the segments as cash generating units in accordance
with IFRS 8. Further details on the segments are provided in
Note 44. The expected future economic benefits of these assets
are tested at the level of the individual underlying cash
generating units at least once annually at each balance sheet
date. In the process, the carrying amount of the capital
employed in a cash generating unit (including the attributed
goodwill) is compared with the recoverable amount of these
assets. The recoverable amount is the higher of value in use and
fair value less costs to sell. The value in use is based on the
expected profitability of the unit and the cost of capital as set out
in the medium-term planning for the individual segments
approved by the board. If the value in use falls below the
carrying amount, the fair value less costs to sell is also
calculated. The higher of the two figures is reported.
Assumptions underlying the impairment testing
The discounted cash flow calculations are based on the multiyear
planning for the segments. In addition to profitability
projections this involves forecasts for risk weighted assets and
capital employed. The main value drivers are receivables
volumes, net interest income after provisioning and net
commission income. Risk assets are a further sensitive planning
parameter. The projections are based on forecasts from the
economic research department for the macroeconomic outlook
as well as other significant parameters such as movements in
interest rates, exchange rates, equity and bond markets.
Planning is based both on management’s past experience and
an assessment of risks and opportunities based on the forecasts.
Multi-year planning normally has a four-year horizon. For
impairment testing the profitability projections from the last
planning year were extrapolated out to 2019 in order to reflect
the impact of Basel III including the transitional arrangements
on capital employed.
In calculating the discounted cash flow we use average riskadjusted
interest rates of between 10.1% (previous year:
11.1%) and 13.2% (previous year: 12.2%). A long-term growth
rate of 2% is assumed for all segments (previous year: 2%).
If there are objective indications that the economic benefits
originally identified will no longer be realised, an impairment
must initially be recognised on the cash-generating unit’s
goodwill and reported in a separate item in the income
statement. Any additional impairment required is divided prorata
between the remaining assets in the unit.
We amortise acquired customer relationships over a period of
seven to fifteen years.
Software is amortised on a straight-line basis over its
expected useful economic life of two to ten years and charged
to operating expenses. Software includes both in-house
developed software and acquired software. Where the reason
for an impairment recognised in previous financial years ceases
to apply, the impairment of intangible assets is reversed to no
more than amortised cost. Impairment reversals are not
permitted for goodwill.