Accounting principles

Property, plant, and equipment are recorded at cost less accumulated depreciation using the straight-line method. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Items of minor value are charged directly to the income statement. All gains and losses on the disposal of property, plant, and equipment are recognized in the income statement.

Accounting principles

Intangible assets are capitalized at cost, amortized using the straight-line method over their useful life.

Goodwill represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquired business, and the book value as at the acquisition date of any previous equity interest in the acquired business over the fair value of the Group’s share of the net assets acquired, without separate capitalization of intangible assets that have not been recognized previously. If the purchase price contains elements that are dependent on future results, they are estimated at and recognized at the date of acquisition. In the event of any deviations when the definitive purchase price is settled, the goodwill is adjusted accordingly (see note business combinations and divestments (4.3)). The estimated useful life is determined on a case-by-case basis and may not exceed 20 years.

Development costs are recognized as an asset when specific recognition criteria are met, and the amount recognized is assessed to be recoverable through future economic benefits.

Other intangibles consist mainly of licenses, patents and advance payments. The useful life of software, developments, and other intangible assets are determined on a case-by-case basis and range from 2 to 5 years.

Use of accounting estimates

Property, plant, and equipment as well as intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To determine whether impairment exists, estimates are made of the expected future cash flows arising from the use or the net selling price of the asset. Actual cost may differ from the discounted future cash flows based on these estimates.