Annual Report 2012 - Swiss Life

125 Consolidated Financial Statements
with the insurance component and the policy for deferred origination costs applies to the other portion
(see 2.15 Intangible Assets).
Administrative and surrender charges are included in policy fee income.
2.11 Property and equipment
Property and equipment are carried at cost less accumulated depreciation. Land is carried at cost and
not depreciated. Depreciation is principally calculated using the straight-line method to allocate
their cost to their residual values over the assets’ estimated useful life as follows: buildings 25 to
50 years; furniture and fixtures five to ten years; computer hardware three to five years.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date.
Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. All other repair and maintenance
costs are charged to the income statement during the financial period in which they are incurred.
Borrowing costs directly attributable to the construction or acquisition of a qualifying asset are capitalised
as part of the cost of that asset. Realised gains and losses on disposals are determined by
comparing proceeds with the carrying amount and are included in the income statement.
Property and equipment are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. 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.
2.12 Leases
Operating lease
The Group primarily enters into operating leases for the rental of equipment. 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 the lease becomes
onerous.
Finance leasE
If the lease agreement transfers the risks and rewards of the assets, the lease is recorded as a finance
lease and the related asset is capitalised. At inception, the asset is recognised at the lower of the present
value of the minimum lease payments or fair value and is depreciated over its estimated useful life.
The correspond ing finance lease obligations are recorded as liabilities.
2.13 Investment management
Revenue consists principally of investment management fees, commission revenue from distribution,
sales of investment fund units and custody account fees. Such revenue is recognised when earned, i.e.
when the services are rendered.
Swiss Life – Annual Report 2012