Audi 2006 Annual Report Download - page 176
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1 7 4
Concessions, rights and licences relate to purchased computer software and sub-
sidies paid.
Research costs are treated as current expenses in accordance with IAS 38. The develop-
ment expenditure for products going into series production is recognised as an intangible
asset, provided that the production of these products is likely to bring economic benefit to
the Audi Group. If the conditions for recognition as an intangible asset are not met, the
expenditure is recognised as an expense in the income statement in the year in which it
occurs.
Development expenditure recognised as an intangible asset comprises all direct costs
and overheads directly allocable to the development process. Borrowing costs are not capi-
talised. Amortisation is performed on a straight-line basis from the start of production, over
the anticipated model life of the developed products.
The amortisation plan is based principally on the following useful lives:
Useful life
Concessions, industrial property rights and similar rights and values 3-15 years
of which software 3 years
Development expenditure recognised as an intangible asset 5-10 years
The amortisation is allocated to the corresponding functional areas.
Goodwill acquired in a business combination is recognised pursuant to IAS 36 and tested
for impairment regularly, at the balance sheet date. If necessary, an impairment loss result-
ing from this test is recognised.
Property, plant and equipment are measured at cost, less scheduled straight-line deprecia-
tion according to the pro rata temporis method.
The costs of purchase include the purchase price, ancillary costs and cost reductions.
In the case of self-constructed fixed assets, the cost of construction includes both the di-
rectly allocable cost of materials and cost of labour, and indirect materials and indirect la-
bour which must be capitalised, together with pro rata depreciation. Interest on borrowings
is not included.
The depreciation plan is based on the following useful lives, which are reassessed yearly:
Useful life
Buildings 25-33 years
Plant fixtures 10-18 years
Plant and machinery 6-12 years
Furniture and fixtures, including special tools 3-15 years
Minor assets with a cost of purchase of up to EUR 410 are fully depreciated in the year of ac-
quisition.
Property, plant and
equipment