IMMOEAST Annual Report 2006/07

Financing costs are capitalised in accordance with IAS 23 if they are related to the acquisition or production of qualified
assets. Borrowing costs include interest and other costs incurred by an entity in connection with the borrowing
of funds. The capitalisation of borrowing costs ends with the completion of the asset.
Ordinary straight-line depreciation on depreciable tangible assets is based on the following useful lives:
Useful life in years
Property (buildings) 25-50
Other tangible assets 4-10
The useful lives of the various assets and the depreciation method are reviewed regularly in agreement with IAS 16
to ensure that they reflect the expected development of the economic value in use of the tangible asset.
3.7 Non-current assets held for sale (IFRS 5)
Additional information on non-current assets held for sale is provided under point 4.1.3.
IFRS 5 classifies assets as held for sale if they can be sold in their present condition and their sale is highly probable.
The involved assets represent non-current items. These assets are no longer depreciated on a regular basis, but are
measured at the lower of carrying value at the point of classification as held for sale and fair value less costs to sell.
The requirements for classification as held for sale are: a) the existence of a concrete intention to sell, b) the immediate
availability of the asset and c) with certain exceptions, the completion of the sale within twelve months.
If the requirements for classification as held for sale are no longer met, the asset is transferred to the appropriate
balance sheet position and measured at the lower of carrying amount and fair value less costs to sell. Any adjustment
to the value of the asset is recognised to the income statement. Investment properties represent an exception to the
valuation requirements set forth in IFRS 5 because these assets are valued in accordance with the fair value model
(IFRS 5.5 (d)). However, the presentation requirements defined in IFRS 5 apply.
3.8 Inventories
Additional information on inventories is provided under point 4.8.
Inventories represent assets that are held for sale during the ordinary course of business, or are in the process of
production for such sale, or take the form of materials or supplies to be consumed in the production process or in the
rendering of services.
The business activities of IMMOEAST as a property company include the acquisition, rental and best possible commercial
utilisation of assets to optimise asset management. The properties held for sale by the IMMOEAST subsidiaries
during the course of ordinary business operations do not fall under the scope of application of IAS 40 (investment
properties), and are therefore treated as inventories in accordance with IAS 2.
Inventories are capitalised at cost and measured at the lower of carrying value or net realisable value as of the balance
sheet date. Net realisable value is determined as the estimated selling price less any outstanding production
Notes
Report by the Executive Board 177
Highlights 2006/07
Business Model and Strategy
Portfolio Structure
Corporate Governance and Outlook
Property Portfolio
Development of Business
Consolidated Financial Statements
Service and Glossary
IAS 23.10-11
IAS 23.4
IFRS 5.1
IFRS 5.25
IFRS 5.15
IFRS 5.6-8
IFRS 5.5 (d)
IAS 2.6
IAS 2.10