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Fair Value of Financial Instruments
The fair value of a financial instrument is the price for which one party would be prepared to
take over the rights and/or obligations from this financial instrument from another party. The
Company has its financial instruments valued by the respective contracting partners, which are
generally banks.
The carrying amount of liabilities from finance leases approximates current market value, applying
the fair value for similar financing. The same also applies to the other financial instruments.
Financial Assets
Financial assets are recognized in accordance with the acquisition cost principle. Impairments
are investigated to determine whether they are permanent. This is assessed on the basis of
available general market data, specific industry and individual company data, which flows into a
plan covering several year applying DCF methods. The duration and the amount by which the fair
value has fallen below the acquisition costs as well as the Company’s intention and the ability to
hold this financial asset also flow into this assessment.
Intangible Assets
Intangible assets acquired for a consideration are capitalized at acquisition cost and amortized
systematically straight-line over their useful lives.
Expenses incurred in connection with the purchase and own development of computer software
used by the Company, including the costs incurred to enable this software to be operated in
the manner intended, are capitalized and amortized systematically over its estimated useful life.
The estimated useful life of software, patents, licenses and similar rights is generally three to
five years. Other useful lives can arise on first-time consolidation of intangible assets that are
acquired as part of a business combination.
Goodwill
Goodwill is capitalized and is tested for impairment at regular intervals (at least once a year) in
accordance with SFAS 142. SFAS 142 requires that goodwill and intangible assets determined to
have an indefinite useful life are no longer systematically amortized, but are tested for impairment
whenever there are indications of this, and, at a minimum, once a year at the same time
each year. The amortization rules under SFAS 142 must be applied to all goodwill and intangible
assets acquired in business combinations after June 30, 2001. Pursuant to SFAS 142, systematic
amortization was to be no longer applied from fiscal 2002 onwards to all other goodwill acquired
on or before June 30, 2001.
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