2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

Intangible assets
Intangible assets are classified into the categories of
goodwill, customer relationships, brand and other.
Customer relationships comprise long-term customer
relationship intangibles from the acquisition of the
three private banks and GAM and are amortized
using the straight-line method over their estimated
useful life of ten years. The Julius Baer Group expects
there to be no foreseeable end to the useful life of
the intangible assets in the brand category. These
intangible assets have an indefinite useful life and are
therefore not written off.
The assets and liabilities of acquired subsidiaries are
revalued for the capital consolidation at the time of
acquisition. The resulting fair value of the identifiable
net assets is set off against the purchase price paid,
and any resulting difference is recognized in the balance
sheet as goodwill. If, based on the annual
impairment test at the cash-generating-unit level,
goodwill no longer merits capitalization, a write-off is
made at that time. Until the end of the 2004 financial
year, goodwill was amortized using the straight-line
method over its estimated useful life, but not exceeding
20 years.
Software that is purchased is capitalized and written
off over its useful life. Minor purchases are debited
directly to general expenses.
Similarly to purchased software, internally generated
software is also capitalized insofar as the conditions
of IAS 38 are fulfilled, i.e. it is probable that the
future economic benefits that are attributable to the
asset will flow to the company and that the costs of
the asset can be identified and measured reliably.
The capitalized assets are written off using the
straight-line method over their useful life. The depreciation
period usually lasts for three to five years.
On each balance sheet date, the intangible assets are
reviewed for indications of impairment, changes in
estimated future benefits or reasons for altering
Notes
depreciation method. If such indications exist, it is
determined whether the carrying amount of the intangible
assets is fully recoverable. A write-down is
made if the carrying amount exceeds the recoverable
amount. Changes in useful life or in depreciation
method are recognized in the income statement.
Intangible assets with an indefinite useful life are
capitalized in the balance sheet and tested annually
for impairment and to confirm their indefinite status.
Liabilities
Liabilities are reported at fair value. Interest and discounts
are debited to interest expenses on an accrual
basis.
Debt issued
Issued bonds and mortgage-backed bonds are initially
recorded at cost, i.e. at the fair value of the remuneration
received minus the transaction expenses. They
are subsequently stated in the balance sheet at amortized
cost using the effective interest rate method.
Provisions
A provision is recognized if, as a result of a past
event, a current liability exists on the balance sheet
date that will probably lead to an outflow of
resources and whose amount can be reliably estimated.
If an outflow of resources is not likely or the
amount of the liability cannot be reliably estimated, a
contingent liability is recognized. If, as a result of a
past event, there is a possible liability on the balance
sheet date whose existence depends on future developments
that are not fully under the control of Julius
Baer Holding Ltd., a contingent liability is likewise
recognized. The recognition and release of provisions
are recorded in the income statement through the
item valuation adjustments, provisions and losses.
Restructuring provisions in the event of sale or termination
of a line of business, closure or relocation of
business locations, changes in management structure
or fundamental reorganization are recognized if,
in addition to the general accounting policies, the
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