Annual report 2012 - Comrod

Annual report 2012 26/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesfollowing criteria are fulfilled:a)it is technically possible to finish the asset insuch a way that it in the future can be used orsold;b) the management’s intention is to finish theasset and to use or sell it;c) it is possible to use or sell the asset;d) it can be demonstrated how the asset willgenerate future incomee) technological and financial resources areavailable to finish the assetf) the costs can be reliably measuredOther development costs are expensed asincurred. Development costs that have previouslybeen expensed are not recognized in the balancesheet in subsequent periods. Capitalizeddevelopment costs are depreciated on a straightline basis over the estimated useful life of the asset.2.14. Impairment of non-financial assetsThe Group assesses at each reporting datewhether there is an indication that an assetmay be impaired. If any indication exists, orwhen annual impairment testing for an assetis required, the Group estimates the asset’srecoverable amount. An asset’s recoverableamount is the higher of an asset’s or cashgeneratingunit’s (CGU) fair value less costs tosell and its value in use and is determined foran individual asset, unless the asset does notgenerate cash inflows that are largely independentof those from other assets or groups of assets.Where the carrying amount of an asset or CGUexceeds its recoverable amount, the asset isconsidered impaired and is written down to itsrecoverable amount. In assessing value in use,the estimated future cash flows are discountedto their present value using a pre-tax discountrate that reflects current market assessments ofthe time value of money and the risks specificto the asset. In determining fair value less coststo sell, an appropriate valuation model is used.These calculations are corroborated by valuationmultiples, quoted share prices for publicly tradedsubsidiaries or other available fair value indicators.Impairment losses of continuing operations arerecognised in the income statement in thoseexpense categories consistent with the function ofthe impaired asset.For assets excluding goodwill, an assessmentis made at each reporting date as to whetherthere is any indication that previously recognisedimpairment losses may no longer exist or mayhave decreased. If such indication exists, theGroup estimates the asset’s or cash-generatingunit’s recoverable amount. A previouslyrecognised impairment loss is reversed only ifthere has been a change in the assumptions usedto determine the asset’s recoverable amount sincethe last impairment loss was recognised. Thereversal is limited so that the carrying amount ofthe asset does not exceed its recoverable amount,nor exceed the carrying amount that would havebeen determined, net of depreciation, had noimpairment loss been recognised for the assetin prior years. Such reversal is recognised in theincome statement.2.15 ProvisionsProvisions are recognized if the Group has anobligation (whether legal or self-imposed) as aresult of a previous event, if it is probable thatthe obligation will result in a financial settlement,26