Read the Registration Document - Guerbet

g) Research and development expendituresIn compliance with IAS 38, research costs are expensed in the period in which they are incurred.According to IAS 38, development expenditures are capitalised as intangible assets only if the Group candemonstrate that they meet the following criteria:- There exists an intent and financial and technical resources to complete the development;- It is probable that future economic benefits attributable to the asset will flow to the Group;- The cost of this asset can be measured reliably.Because of risks and uncertainties related to regulatory authorisations, the Group considers that expensesincurred in connection with obtaining market authorisations (AMM) do not meet the above definition ofintangible assets. Consequently, development expenditures are expensed in the period incurred.Furthermore, expenses incurred after market authorisations are obtained constitute selling costs that maynot be capitalised under IAS 38.h) Property, plant and equipmentProperty, plant and equipment are recorded at historical acquisition cost or production cost, Except for theVillepinte site recorded at fair value as of 1 January 2004 according to the option available under IFRS1 forthe first time adoption of IFRS.All costs directly attributable and necessary for commissioning investments are capitalised, from pre-projectcosts (summaries and details) engineering costs to costs for validating and certifying installations.In accordance with revised IAS 23, borrowing costs are capitalised in the value of fixed assets for strategicinvestment projects spread over several months of manufacturing operations and having begun after 1January 2009.Equipment grants received are not deducted from the value of fixed assets but are presented according totheir amortised value under deferred revenue.Depreciation allowances are calculated on a straight-line basis over the assets’ useful lives at acquisition orproduction cost. They are eventually restated, deducting when applicable their residual value. Depreciationis calculated on a straight-line basis over the estimated useful life of these assets, i.e. on average:- Buildings: 20 to 50 years- Fixtures, fittings: 10 to 20 years- Machinery and equipment 5 to 10 years- Other tangible assets: 5 to 10 yearsi) Impairment of fixed assetsGoodwill and indefinite life intangible assets are subject to an impairment test in accordance with IAS 36Impairment of assets, at least once a year or more frequently when there exists evidence of impairment.The annual tests are carried out in the fourth quarter.Other intangible assets are also subject to impairment tests whenever events or circumstances indicate thatthe carrying value of these assets may not be recoverable.The impairment test involves comparing the carrying value of the asset with its recoverable value. Therecoverable amount of an asset is measured at the higher of its net selling price and value in use.Value in use is the present value of estimated future cash flows expected to arise from the continuing use ofan asset (or groups of assets) and its disposal at the end of its useful life. The discount rate applied is thepre-tax discount rate that reflects the current market assessments of the time value of money and the risksspecific to the asset. This corresponds to the expected rate of return investors would request if they wererequired to choose an investment involving an amount, maturity and risk equivalent to the asset in question.The net selling price is the amount obtainable from the sale of an asset (or group of assets) betweenknowledgeable, willing parties in an arm's-length transaction after deducting any direct incremental disposalcosts.When impairment tests indicate a loss in value, an impairment is recorded so that the carrying amount doesnot exceed the recoverable value.77