Annual report 2005 - Sava dd

| notes to the consolidated financial statements in accordance with IFRS |
1 5 1 |
Property that is being constructed or developed for
future use as investment property is classified as
property, and stated at cost until construction or
development is complete, at which time it is reclassified
as investment property.
Where parts of an item of property, plant and equipment
have different useful lives, they are accounted for as
separate items of property, plant and equipment.
Subsequent costs
The Sava Group recognises in the carrying amount of an
item of property, plant and equipment the cost of
replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits
embodied with the item will flow to the Sava Group and
the cost of the item can be measured reliably. All other
costs are recognised in the income statement as an
expense as incurred.
Depreciation
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each
part of an item of property, plant and equipment. Land
is not depreciated.
g) Intangible assets
Goodwill
All business combinations are accounted for by
applying the purchase method. In respect of associates,
the carrying amount of goodwill is included in the
carrying amount of the investment in the associate.
Negative goodwill arising on an acquisition is
recognised directly in profit or loss.
Other intangible assets
Other intangible assets that are acquired by the Sava
Group are stated at cost less accumulated amortisation
and impairment losses (see accounting policy
Impairment of Assets – note l).
Expenditure on internally generated goodwill and
brands is recognised in the income statement as an
expense as incurred.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets
is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it
relates. All other expenditure is expensed as incurred.
Amortisation
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite.
Intangible assets are amortised from the date they are
available for use. The estimated useful lives for software
and other patents and licence are five years.
h) Investments
Investments in debt and equity securities
As regards the intent of its acquisition investments in
debt and equity securities are classified as available for
sale. These financial instruments are recognised or
derecognised by the Group on the date it commits to
purchase / sell the investments. The securities available
for sale are equity securities of companies that either are
or are not listed at the Stock Exchange.
The investments in shares are stated at fair value. Profit
or loss are recognised directly in equity. When these
investments are derecognised, the cumulative gain or
loss previously recognised directly in equity is
recognised in profit or loss for the period.
The fair value of financial instruments classified as
available for sale is their quoted bid price at the balance
sheet date. The fair value of shares and interests of a
company that is not listed is estimated on the basis of
recently known transactions. The fair value of availablefor-sale
securities is ascertained every three months.
Investment property
Investment properties are properties which are held
either to earn rental income or for capital appreciation or
for both. For evaluating investment properties the cost
model is applied.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each
part of an item of property, plant and equipment. Land
is not depreciated. The estimated useful lives for
investment property are 20 – 30 years.