Adidas 2000 Annual Report Download - page 73

adidas-Salomon ANNUAL REPORT 2000
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Notes to Consolidated Financial Statements
Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term, highly
liquid investments with maturities of three months and less.
Receivables
Receivables are stated at nominal amounts less allowances for
doubtful accounts. These allowances are determined on the
basis of individual risk assessment and past experience of losses.
Inventories
Merchandise and finished goods are valued at the lower of cost
or net realizable value. Costs are determined using a standard
valuation method which approximates the first-in, first-out
method or the average cost method. Costs of finished goods
include cost of raw materials, direct labor and manufacturing
overheads. The lower of cost or net realizable value allowances
are computed consistently throughout the Company based on
the age and expected future sales of the items on hand.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumu-
lated depreciation. Depreciation is computed on a declining
balance or straight-line basis on useful lives as follows:
Years
Buildings 10–50
Leasehold improvements 5–20
Equipment, machinery and furniture and fittings 2–10
Expenditures for maintenance and repairs are expensed as in-
curred. Significant renewals and improvements are capitalized.
Impairment
In the event that facts and circumstances indicate that the
costs of long-lived assets are impaired, an evaluation of
recover ability is performed. An exceptional write-down is made
if the carrying amount exceeds the recoverable amount.
Finance Leases
If under a lease agreement substantially all risks and rewards
associated with an asset are transferred to the Company,
the asset and the corresponding liability are recognized at the
fair value of the asset or the lower net present value of the
minimum lease payments.
Goodwill and Identifiable Intangible Assets
Acquired goodwill and intangible assets are valued at cost less
accumulated amortization.
Goodwill is the excess of the purchase cost over the fair value
of the identifiable assets and liabilities acquired. Goodwill aris-
ing from the acquisition of a foreign entity and any fair value
adjustments to the carrying amounts of assets and liabilities of
that foreign entity are treated as assets of the reporting entity
and are translated at exchange rates prevailing at the date of
the initial consolidation.
Amortization is calculated on a straight-line basis with the
following useful lives:
Years
Goodwill 5–20
Patents, trademarks and concessions 5–10
Software 3–5
Expenditures for internally generated intangible assets are
expensed as incurred.