Hydro Annual Report 2011b

F34
FINANCIAL STATEMENTS
Note 13 - Impairment of non-current assets
For Metal Markets and Rolled Products impairment indicators were noted for two small CGUs with weak performance. The
test results concluded with recoverable amounts marginally higher than carrying value.
Goodwill and intangible assets with indefinite life are required to be tested annually, in addition to any tests required when
impairment indicators are determined to be present. Hydro has elected to do the annual impairment test of goodwill in the
fourth quarter.
Goodwill is allocated to CGUs or groups of CGUs as shown in the following table:
Amounts in NOK million 2011 2010
Alumina production Brazil (Bauxite & Alumina) 3 310 ­
Remelters sector (Metal Markets) 244 238
Extrusion Eurasia sector 326 325
Building Systems sector 230 228
Extrusion North America sector 79 77
Extrusion South America sector 74 78
Precision Tubing sector 38 39
Total Extruded Products 747 747
Total goodwill 4 301 985
For Metal Markets and Extruded Products, impairment tests on goodwill have been based on approved business plan for the
next year, managements best estimate of cash flows for the following four years and extrapolated to a 15 years cash flow
estimate. See note 4 Critical accounting judgment and key sources of estimation uncertainty for additional information about
impairment testing. Goodwill in Bauxite and Alumina Brazil was recognized as part of the acquisition of Vale Aluminium in
2011, see note 5 Acquisitions.
Note 14 - Research and development
Total expensed research and development cost was NOK 508 million in 2011 and NOK 543 million in 2010. Research and
development activities are intended to make production of aluminium more efficient including further improving the
operational and environmental performance of Hydro's electrolysis technology. A significant proportion of the means are also
used for further developing the production processes and products within casting and alloy development, extrusion, precision
tubing, building systems as well as rolled products.
To the extent development costs are directly contributing to the construction of a fixed asset, the development costs are
capitalized as part of the asset provided all criteria for capitalizing the cost are met. Costs incurred during the preliminary
project stage, as well as maintenance costs, are expensed as incurred.
Note 15 - Operating leases
Future minimum lease payments due under non-cancellable operating leases are as follows:
Less than
Amounts in NOK million 1 year 1­5 years Thereafter Total
Operating lease obligation 2011 513 1 644 3 724 5 881
Operating lease obligation 2010 437 1 202 1 365 3 003
Operating lease expense for office space, machinery and equipment amounts to NOK 552 million for 2011 and NOK 552
million for 2010.