Annual Report 2010 - Frauenthal Holding AG

102 Annual Report 2010
Consolidated Financial Statements Frauenthal Holding Group 2010
[10] Non-current assets
Acquired and internally generated intangible assets are recognised in accordance with IAS 38 if it is probable that use of
the assets will be associated with future economic benefits and their cost can be reliably determined.
They are recognised at cost, and are amortised over between three and ten years if their useful lives are determinable.
Intangible assets with indefinite useful lives and goodwill recognised on consolidation are not amortised. Pursuant to paragraph
108 of IAS 38, the carrying values are tested for impairment at least annually, and impairment is recognised wherever
there is an indication that the economic benefits expected to arise from the assets have declined. Most of the non-amortised
intangible assets are goodwill and acquired trademarks whose useful lives cannot be determined at present.
Development costs incurred by Porzellanfabrik Frauenthal GmbH (diesel catalysts for trucks) are recognised as internally
generated intangible assets in accordance with IAS 38. Recognition is at production cost provided that there are clearly
allocatable costs, that completion of the assets is technically feasible and that there is a market for them. There must also
be a sufficient probability that the development activities will generate future cash inflows. All the development projects in
progress are being carried out with the intention of completing them. The capitalised production costs comprise the costs
directly and indirectly attributable to the development process. Capitalised development costs are amortised over the anticipated
product life cycle from the commencement of production. Sufficient technical and financial resources are available
to complete the development projects.
All property, plant and equipment is used for operational purposes, and is measured at cost less depreciation over the
useful lives of the assets. Depreciation is according to the straight-line method. Low value non-current assets with costs per
item of up to EUR 400 that are immediately written off in the local accounts for tax reasons are likewise written off in the
consolidated accounts in the year of addition and reported as disposals on grounds of immateriality.
Uniform rates of depreciation throughout the Group are based on the following useful lives:
in years
Intangible assets with finite useful lives 3 to 10
in years
Buildings 10 to 50
Plant and equipment 5 to 20
Other plant and equipment, fixtures and fittings 3 to 10
Reductions in value are recognised as impairment losses. If the reason for impairment ceases to apply it is reversed up to the
cost of the asset, net of depreciation.
The cost of self-constructed assets includes all costs directly attributable to the production process and reasonable production
overheads. Since 2009 borrowing costs have only been capitalised if they are attributable to qualifying non-current
assets. Borrowing costs are recognised as part of the purchase or conversion costs.
Leased assets are reported as non-current assets. In accordance with IAS 17, property, plant and equipment acquired under
finance leases is recognised at fair value at the time of addition or, if lower, the present value of the lease payments.
Where it is not reasonably certain that ownership will pass to the Group, depreciation is on a straight-line basis over the