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82 being focused: being better
Goodwill
Goodwill is capitalized and subject to an impairment test at regular intervals (at least once a
year) in accordance with SFAS 142. SFAS No. 142 requires that goodwill and other intangible
assets with an indefinite useful life are no longer amortized, but tested for impairment at least
once a year. The impairment rules of SFAS No. 142 must be applied to all goodwill and other
intangible assets acquired through business combinations after June 30, 2001. According
to SFAS No. 142, all other goodwill acquired before June 30, 2001 is subject to impairment as
from fiscal 2002.
Goodwill with a finite useful life is amortized over its expected useful life.
Property, Plant and Equipment
Property, plant and equipment is valued at historical acquisition or production cost, less
accumulated depreciation. Depreciation is carried out over the useful life of the assets using
the straight-line method. Production cost for plant and equipment produced by the Company
includes direct material and labor charges, as well as an appropriate amount of allocable overheads
and – where the manufacturing process extends over a longer period of time – interest
on borrowing from third parties during the construction period. Administrative costs are only
capitalized where they are directly related to manufacture. Costs of maintenance and repair
are recognized as expenses. Assets with a finite useful life are depreciated with the straightline
method. For reasons of immateriality, low-value assets with an acquisition cost of under
410 euros are completely written off in the year of acquisition in agreement with German accounting
practice. Where assets are sold or scrapped they are retired from the balance sheet
with any profit or loss duly accounted.
Scheduled depreciation is based the following useful lives:
Leasehold improvements and leased assets are depreciated over the duration of their useful
life or over the rental or lease period, whichever is shorter.
years
Buildings 20 – 25
Technical equipment and machinery 8 – 16
Other equipment, office equipment 3 – 11
State Aid and Subsidies
Upon receipt, state aid and subsidies are deducted from the acquisition and production costs
of the investment supported, provided the conditions relating to the investment are fulfilled.