Notes to the consolidated financial statements - Efacec

1.5 Tangible Fixed Assets
Land and buildings basically correspond to factories and offi ces. Land is shown at fair value, based on periodic evaluations carried
out at least every three years by external independent assessors. Other tangible fi xed assets are shown at historical cost, less
depreciation, including all expenditure directly attributable to the acquisition of the assets.
Subsequent costs are included in the cost already booked for the asset, or recognised as separate assets, as deemed appropriate,
but only when it is probable that economic benefi ts will accrue to the company and that the cost can be measured reliably. Other
expenditure for repairs and maintenance are recognised as costs within the period in which they are incurred.
Increases resulting from revaluations are shown in Reserves in Shareholders’ Funds. Each year, the difference between depreciation
based on the re-valued amount of the asset taken to profi t and loss in the period, and depreciation based on the original cost
of the asset, is transferred from fair value Reserves to Retained Profi ts.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method using the cost value or the revalued
amount, in order to apportion their cost or re-valued amount over the useful life of the asset down to their residual value,
as follows:
Line Years
Land -
Buildings and Other Constructions 25 - 50
Plant and Equipment 8 - 12
Vehicles 4 - 5
Tools and Utensils 4 - 8
Offi ce Equipment 4 - 6
Depreciation begins in the month following that in which the asset entered service, in accordance with its useful life, as follows.
Asset residual values and respective useful lives are revised and adjusted, if deemed necessary, at the balance sheet date. If the
amount booked is greater than the recoverable value of the asset, it is immediately adjusted to its estimated recoverable value
(Note 1.7).
Gains and/or losses on disposal or write offs are determined by calculating the difference between the net accounting value of the
asset, and its disposal or write off value, being in the latter case zero, and included in the Profi t or Loss for the period.
1.6 Intangible Assets
(a) Goodwill
Goodwill represents the difference between the excess of the cost of acquisition and the fair value of identifi able assets and liabilities
of the subsidiary/associate on the date of acquisition (Note 1.2).It is shown on a separate line in the Balance Sheet.
Goodwill is subject to impairment tests on an annual basis, and is shown at cost, less accumulated impairment losses. Gains or
losses resulting from the sale of an entity include the value of its respective goodwill.
Goodwill is allocated to cash fl ow generating units (UGC) for carrying our impairment tests (Note 1.7). The amount recoverable
from a UGC is calculated based on calculations of useful value. These calculations use cash fl ow projections based on fi nancial
budgets approved by the management entity, covering a period of at least 4 years.
The management entity works out the budgeted gross margin based on prior performance and its expectations for market development.
The average weighted growth rate used is consistent with the forecasts included in sector reports. The discount rates used
are before tax, and refl ect the specifi c risks related to the relevant sectors.
b) Software
The acquisition cost of software licences is capitalised and includes all costs incurred for its acquisition and those required to put
the available software into use. These costs are depreciated over the estimated useful life (not exceeding 5 years).
Costs related to the development or maintenance of the software are recognised as costs of the period in which they are incurred.
Costs directly associated with the production of identifi able and unique software controlled by the Group, and which is probably
going to generate future economic benefi ts that are superior to costs involved beyond one year, are recognised as intangible assets.
Direct costs include staff costs to develop the software and a share of relevant fi xed costs.
Software development costs recognised as assets are amortised over its estimated useful life (not exceeding 5 years).
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