Annual report 2009 - Dexia.com

Notes to the consolidated fi nancial statementsManagement reportConsolidatedfinancial statementsAnnual financial statementsAdditional information1.21. Tangible fixed assetsTangible fixed assets include property, plant and equipmentand investment properties.All property, plant and equipment are stated at its cost lessaccumulated depreciation and impairments.Depreciation is calculated using the straight-line method towrite down the cost of such assets to their residual valuesover their estimated useful lives.The main service lives are as follows:• Buildings (including acquisition costs and non deductibletaxes): 20 to 50 years;• Computer equipment: 3 to 6 years;• Leasehold improvements, equipment and furniture: 2 to 12years;• Vehicles: 2 to 5 years.An item of property, plant and equipment can be composedof significant parts with individually varying useful lives. Insuch a case, each part is depreciated separately over its estimateduseful life. The following parts have been defined:• Structure of the building : 50 years;• Roof, and frontage : 30 years;• Technical installations : 10 to 20 years;• Fixture and fittings: 10 to 20 years.The exchange losses on liabilities for the acquisition of anasset are expensed immediately.Borrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset formpart of the cost of that asset and, therefore, should be capitalised.Other borrowing costs are recognised as an expense.Where the carrying amount of an asset is greater than itsestimated recoverable amount, it is written down to its recoverableamount. Gains and losses on disposals of property andequipment are determined by reference to their carryingamount and are included in “Other net income”. Expenditurethat enhances or extends the benefits of real estate or fixedassets is capitalised and subsequently depreciated.Investment properties are those properties held to earn rentalsor for capital appreciation. Dexia may also partly use certaininvestment properties. If the “own use” portions can be soldseparately or leased out separately under finance lease, thenthese portions are accounted for separately. If the “own use”portions cannot be sold separately, the property is an investmentproperty only if Dexia holds an insignificant portion forits own use.Investment properties are recorded at its cost less accumulateddepreciation and impairments. The investment propertiesare depreciated over their useful lives on a straight-linebasis. Depreciation on buildings and other assets given inoperating lease are booked in “Other net income”.1.22. Intangible assetsIntangible assets mainly consist of internally generated andacquired software. Costs associated with maintaining computersoftware programs are recognised as expense as incurred.However, expenditure that enhances or extends the benefitsof computer software programs beyond one year is used toincrease the original cost of the software. Computer softwaredevelopment costs recognised as assets are amortised usingthe straight-line method over their useful lives from the timethe software is available for use. This amortization period isusually between three and five years.Where the carrying amount of an asset is greater than itsestimated recoverable amount, it is written down to its recoverableamount. Gains and losses on disposals of intangibleassets are determined by reference to their carrying amountand are included in Net income on investments. Expenditurethat enhances or extends the benefits is capitalised and subsequentlydepreciated.1.23. Goodwill1.23.1. Positive goodwillGoodwill represents the excess of the cost of an acquisitionover the fair value of Dexia’s share of the net assets of theacquired subsidiary or associated undertaking at the date ofacquisition. Goodwill is allocated to cash-generating units orgroups of cash-generating units for the purpose of impairmenttesting. Cash-generating units may be a legal entity, ormay be designed based on criteria of, geographic area andbusiness segment.Variations in percentage of ownership in fully-consolidatedcompanies are considered as transactions with shareholders.Therefore, neither fair value adjustments nor goodwill adjustmentsare made, when percentage increases or decreasestake place without change in the consolidation method. Thedifference between purchase or sale of net asset and the purchaseor sale price is directly recorded in equity.1.23.2. Impairment of goodwillThe carrying amount of goodwill is reviewed at year-end.When circumstances or events indicate that there may beuncertainty about the carrying amount, goodwill is writtendown for impairment when the recoverable amount of thebusiness is insufficient to support the carrying value.1.24. Other assetsOther assets mainly comprise accrued income (non-interestrelated), prepayments, operational taxes and other accountsreceivable. They also include insurance products (reinsurance,insurance premiums receivables, etc.), construction contracts,inventories, plan assets relating to employee benefit obligations.These other assets are recorded at amortised cost lessany allowance for impairment if applicable or following theapplicable standard. Plan assets are recognised in accordancewith IAS 19 requirements.1.25. Leases1.25.1. A Dexia company is the lesseeA finance lease is a lease that transfers substantially all therisks and rewards incidental to ownership of an asset. Anoperating lease is a lease other than a finance lease.Dexia principally enters into operating leases for the rental ofequipment or real estate. Lease rentals are recognised in thestatement of income on a straight-line basis over the periodof the lease.When an operating lease is terminated before the leaseperiod has expired, any payment to be made to the lessor by116Dexia Annual report 2009