Page 42 - Bouvet årsrapport ENG 2010 ePub

Bouvet annual report 2010 42

lower of fair value and the minimum lease’s present value. When calculating the lease agreement’s present value, the implicit inter-est expense of the agreement is applied, if it is possible to calculate this rate. If not, the Group’s marginal loan rate is applied. Direct costs related to the establishment of the lease are included in the asset’s cost price.

Te depreciation period is consistent with those applied to other assets owned by the Group which are subject to depreciation. If it is uncertain whether the Group will take over the asset when the lease expires, the assets are depreciated over the lease’s term or the depre-ciation period, whichever is the shorter.

Te Group has no fnancial leases at 31.12.2010.

Operating leases

Leases where most of the risk lies with the other contracting party are classifed as operating leases. Lease payments are clas-sifed as operating costs and recognised in the income statement during the contract period.

Intangible assets acquired separately are recorded at cost. Costs related to intangible assets at acquisitions are disclosed at real val-ue in the Group’s opening balance. Balance sheet recorded intangible assets are carried at cost less any accumulated amortisation and impairment losses.

Te cost of intangible assets includes the purchase price and any duties/taxes and expenses directly related to the acquisition of the asset.

Internally generated intangible assets, with the exception of capitalised development costs, are not capitalised, and expenditure is charged to proft and loss in the year in which the expenditure is incurred.

Te useful lives are assessed to be either fnite or indefnite. Intangible assets with fnite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the

intangible asset may be impaired. Goodwill is not depreciated, but tested annually for impairment. Te amortisation period and method are assessed at least once a year. Changes in amortisation method and/or period are treated as a change in estimate.

Intangible assets with indefnite useful lives are tested for impairment annually, either individually or at the cash generating level. Such intangible assets are not amortised. Te useful life is reviewed annually to determine whether the indefnite life assess-ment continues to be supportable. If not, the change to fnite useful lifetime is made prospectively.

Business Combinations

Goodwill

Te diference between cost at acquisi-tion and the Group’s share fair value of net measureable assets at the time of acquisition is classifed as goodwill. Concerning invest-ments in associated companies, goodwill is included in the investment’s balance sheet recorded value.

In the balance sheet, goodwill is recognised at cost less any accumulated amortisation.

Assets and liabilities taken over in mergers are recognised at fair value in the Group’s opening balance.

Te allocation of cost at mergers is changed if any new information on fair value at the date of the take-over of control arises.

Goodwill is tested at least annually for impairment. In this connection, goodwill is allocated to cash fow generating units or groups of cash generating units expected to have synergy efects of the merger.

Equity at real value in excess of acquisition cost

Equity at real value in excess of acquisition cost at mergers is immediately recognised as income at the time of the acquisition.

Financial instruments

In accordance with IAS 39 Financial Instru-ments: Recognition and Measurement,

fnancial instruments are classifed within the scope of IAS 39 in the following cat-egories: at fair value with changes in value through proft or loss, held to maturity, loans and receivables, available for sale and other liabilities.

Te Group has fnancial instruments in the form of trade accounts receivable and pay-able, recognised at amortised cost.

Trade accounts receivables are initially recognised at fair value plus any transac-tion costs. Trade accounts receivables are subsequently carried at amortised cost using the efective interest method, if the amorti-sationefect is material. Te carrying amount is subsequently reduced by any impairment losses. Provisions for impairment are made when there are objective indicators that the group will not receive their contractual payments.

Te fair value of fnancial assets is classifed as “available for sale” and “held for trading purposes” is decided with a reference to the stock exchange rate at the balance sheet date. For non-listed fnancial assets, fr value is estimated by applying valuation tech-niques, based on assumptions not substanti-ated by observable market prices.

Te carrying amount of trade accounts re-ceivable and payable is approximately equal to fair value, as they are agreed at “normal” conditions and normally have a short period to maturity.

Cash and cash equivalents

Cash includes cash in hand and bank deposits. Cash equivalents are short-term liquid investments that can be converted to cash within three months and at a known amount.

Liabilities and equity Financial instruments are classifed as li-abilities or equity in accordance with the underlying fnancial reality.

Interest, dividend, proft and loss related to a fnancial instrument classifed as debt will