LensCrafters 2012 Annual Report Download - page 194

ANNUAL REPORT 2012> 108 |
(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.
Trademarks are amortized on a straight-line basis over periods ranging between 20 and
25 years. Distributor network, customer relation contracts and lists are amortized on a
straight-line basis or on an accelerated basis (projecting diminishing cash flows) over
periods ranging between 3 and 25 years. Other intangible assets are amortized on a
straight-line basis over periods ranging between 3 and 7 years.
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.
Tangible assets and intangible assets with a definite useful life are subject to amortization
and are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognized for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, tangible and intangible assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units).
Intangible assets other than goodwill are reviewed at each reporting date to assess whether
there is an indication that an impairment loss recognized in prior periods may no longer exist
or has decreased. If such an indication exists, the loss is reversed and the carrying amount of
the asset is increased to its recoverable amount, which may not exceed the carrying amount
that would have been determined if no impairment loss had been recorded. The reversal of
an impairment loss is recorded in the consolidated statement of income.
Financial assets
The financial assets of the Group may fall into the following categories:
(a) Financial assets at fair value through profit and loss