Annual Report & Accounts 2009 - Anglo Irish Bank

Notes to the financial statements continued
1. General information and accounting policies continued
1.14 Investment contracts continued
Premiums received and claims paid are accounted for directly in the statement of financial position as adjustments to the investment
contract liability. Investment income and changes in fair value arising from the investment contract assets and the corresponding
movement in investment contract liabilities are included on a net basis in other operating income. Revenue on investment management
services provided to holders of investment contracts is recognised as the services are performed.
1.15 Derecognition
A financial asset is derecognised when it has been transferred and the transfer qualifies for derecognition. A transfer requires that the
Group either transfers the contractual rights to receive the asset's cash flows or retains the right to the asset's cash flows but assumes a
contractual obligation to pay those cash flows to a third party.
After a transfer, the Group assesses the extent to which it has retained the risks and rewards of ownership of the transferred asset. If
substantially all the risks and rewards have been retained, the asset remains in the statement of financial position. If substantially all the
risks and rewards have been transferred, the asset is derecognised.
If substantially all the risks and rewards have been neither retained nor transferred, the Group assesses whether or not it has retained
control of the asset. If it has not retained control, the asset is derecognised. Where the Group has retained control of the asset, it
continues to recognise the asset to the extent of its continuing involvement.
A financial liability is removed from the statement of financial position when the obligation is discharged, cancelled or expires.
1.16 Property, plant and equipment
Property, plant and equipment is held for use in the business and is stated at cost less accumulated depreciation and provisions for
impairment, if any. Additions and subsequent expenditure are capitalised only to the extent that they enhance the future economic
benefits expected to be derived from the asset. Property, plant and equipment are depreciated on a straight-line basis to their residual
values over their estimated useful economic lives as follows:
Freehold buildings 2% per annum
Fixtures and fittings 12.5% to 25% per annum
Motor vehicles 20% per annum
Computer equipment 25% per annum
Leasehold improvements are depreciated on a straight-line basis over the shorter of twenty years or the period of the lease or the period
to the first break clause date in the lease. Freehold land is not depreciated.
The useful lives and residual values of property, plant and equipment are reviewed and adjusted, if appropriate, at the end of each
reporting period. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. If impaired, an asset's carrying amount is written down immediately to its estimated
recoverable amount which is the higher of its fair value less costs to sell or its value in use. Gains and losses arising on the disposal of
property, plant and equipment are included in the income statement.
1.17 Trading properties
Trading properties are held for resale and are stated at the lower of cost and net realisable value.
1.18 Intangible assets
Goodwill
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of the transaction, plus costs directly attributable to the acquisition. Identifiable assets acquired are fair valued at the
acquisition date. The excess of the Group's cost of acquisition over the fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill.
Goodwill is tested annually for impairment or more frequently when there are indications that impairment may have occurred. Goodwill
is allocated to cash-generating units for the purposes of impairment testing. When the recoverable amount of a cash-generating unit is
less than its carrying amount, an impairment loss is required. The recoverable amount of a cash-generating unit is the higher of its fair
value less costs to sell and its value in use. Goodwill is carried at cost less accumulated impairment losses.
In accordance with IFRS 1, goodwill written off directly to reserves or amortised to the income statement prior to 1 October 2004 under
Irish Generally Accepted Accounting Principles has not been reinstated.
Computer software
Computer software is stated at cost less accumulated amortisation and provisions for impairment, if any. The identifiable and directly
associated external and internal costs of acquiring and developing software are capitalised where the software is controlled by the Group
and where it is probable that future economic benefits that exceed its cost will flow from its use over more than one year. Costs
associated with maintaining software are recognised as an expense when incurred. Capitalised computer software is amortised on a
straight-line basis over its expected useful life which is normally four years.
1.19 Investment property
Investment property comprises freehold and leasehold properties that are held to earn rentals or for capital appreciation or both.
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