UBI Banca Group

Amortisation begins when the asset is available for use and ceases on the date on which the
asset is derecognised.
Intangible assets with an indefinite useful life (see goodwill as defined in the section below if
positive) are recognised at cost net of any impairment loss resulting from periodic reviews
when tests are performed to verify the appropriateness of the carrying amount of the assets
(see section below). As a consequence amortisation of these assets is not calculated.
No intangible assets arising from research (or from the research phase of an internal project)
are recognised. Research expenses (or the research phase of an internal project) are recognised
as expenses at the time at which they are incurred.
An intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if, the following can be demonstrated:
(a) the technical feasibility of completing the intangible asset so that it becomes available for
sale or use;
(b) the intention of the company to complete the intangible asset to use it or sell it;
(c) the capacity of the company to use or sell the intangible asset.
At the end of each annual or interim reporting period the existence of potential impairment of
the value of intangible assets is assessed. The impairment is given by the difference between
the carrying value of the assets and the recoverable amount and is recognised, as are any
recoveries of value, under the item 210 “Net impairment losses on intangible assets”, with the
exception of impairment losses on goodwill which are recognised under item 260 “Net
impairment losses on goodwill”.
8.4 Goodwill
Goodwill is defined as the difference between the purchase cost and the fair value of assets
and liabilities acquired as part of a business combination which consists of the union of
separate enterprises or businesses in a single entity required to prepare financial statements.
The result of almost all business combinations consists in the fact that a sole entity, an
acquirer, obtains control over one or more separate businesses of the acquiree. When an entity
acquires a group of activities or net assets that do not constitute a business it allocates the
cost of the group to individual assets and liabilities identified on the basis of their relative fair
value at the date of acquisition.
A business combination may give rise to a holding relationship between a parent company and
a subsidiary in which the acquirer is the parent company and the acquiree is the subsidiary.
All business combinations are accounted for using the purchase method of accounting.
The purchase method involves the following steps:
(a) identification of the acquirer (the acquirer is the combining enterprise that obtains control
of the other combining enterprises or businesses);
(b) determination of the acquisition date;
(c) determination of the cost of the business combination, intended as the consideration
transferred by the purchaser to the shareholders of the acquiree;
(d) the allocation, as at the acquisition date, of the cost of the business combination by means
of the recognition, classification and measurement of the identifiable assets acquired and
the identifiable liabilities assumed;
(e) recognition of any existing goodwill.
Business combinations performed with subsidiary undertakings or with companies belonging
to the same group are recognised on the basis of the significant economic substance of the
transactions.
In application of that principle, the goodwill arising from those transactions in the separate
financial statements is recognised:
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