LensCrafters 2011 Annual Report Download - page 188

ANNUAL REPORT 2011> 112 |
of any incentives received from the lessor) are charged to the consolidated statement of
income on a straight-line basis over the lease term.
Leases where lessees bear substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalized at the lease’s commencement at the
lower of the fair value of the leased property and the present value of the minimum lease
payments.
Each finance lease payment is allocated between the liability and finance charges. The
corresponding rental obligations, net of finance charges, are included in “long-term debt”
in the statement of financial position. The interest element of the finance cost is charged
to the consolidated statement of income over the lease period. The assets acquired under
finance leases are depreciated over the shorter of the useful life of the asset and the lease
term.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the
Group’s share of the net identifiable assets of the acquired subsidiary at the date of
acquisition. Goodwill is tested at least annually for impairment and carried at cost
less accumulated impairment losses. Impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
(b) Trademarks and other intangible assets
Separately acquired trademarks and licenses are shown at historical cost. Trademarks,
licenses and other intangible assets, including distribution networks and franchisee
agreements, acquired in a business combination are recognized at fair value at the
acquisition date. Trademarks and licenses have a finite useful life and are carried at
cost less accumulated amortization and accumulated impairment losses. Amortization
is calculated using the straight-line method to allocate the cost of trademarks and
licenses over their estimated useful lives.
Contractual customer relationships acquired in a business combination are recognized
at fair value at the acquisition date. The contractual customer relations have a finite useful
life and are carried at cost less accumulated amortization and accumulated impairment
losses. Amortization is recognized over the expected life of the customer relationship.
All intangible assets are subject to impairment tests, as required by IAS 36 – Impairment of
Assets, if there are indications that the assets may be impaired.
Impairment of assets
Intangible assets with an indefinite useful life for example goodwill, are not subject to
amortization and are tested at least annually for impairment.