Mercedes 2009 Annual Report Download - page 188

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Earnings (loss) per share. Basic earnings (loss) per share are
calculated by dividing profit or loss attributable to shareholders
of Daimler by the weighted average number of shares outstand-
ing. Diluted earnings (loss) per share additionally reflect the
potential dilution that would occur if all stock option plans were
exercised.
Goodwill. For acquisitions consummated after the transition to
IFRS on January 1, 2005, goodwill represents the excess of
the cost of an acquired business over the fair values assigned to
the separately identifiable assets acquired and the liabilities
assumed. The purchase of minority rights is treated in the same
manner. In the case of an adjustment for contingent considera-
tion, such amount is principally included in goodwill.
Other intangible assets. Intangible assets acquired are mea-
sured at cost less accumulated amortization. If necessary, accu-
mulated impairment losses will be recognized. Intangible assets
with indefinite lives are reviewed annually to determine whether
indefinite-life assessment continues to be supportable. If not, the
change in the useful-life assessment from indefinite to finite is
made on a prospective basis.
Intangible assets other than development costs with finite use-
ful lives are generally amortized on a straight-line basis over their
useful lives (3 to 10 years) and are reviewed for impairment
whenever there is an indication that the intangible asset may be
impaired. The amortization period for intangible assets with
finite useful lives is reviewed at least at each year-end. Changes
in expected useful lives are treated as changes in accounting
estimates. The amortization expense on intangible assets with
finite useful lives is recorded in functional costs.
Development costs are recognized if the conditions for capital-
ization according to IAS 38 are met. Subsequent to initial recog-
nition, the asset is carried at cost less accumulated amortization
and accumulated impairment losses. Capitalized development
costs include all direct costs and allocable overheads and are
amortized over the expected product life cycle (2 to 10 years).
Amortization of capitalized development costs is an element
of the manufacturing costs allocated to those vehicles and com-
ponents by which they have been generated and is included in
cost of sales when the inventory is sold.
Property, plant and equipment. Property, plant and equipment
are valued at acquisition or manufacturing costs less accumulat-
ed depreciation. If necessary accumulated impairment losses will
be recognized. The costs of internally produced equipment and
facilities include all direct costs and allocable overheads. Acquisi-
tion or manufacturing costs include the estimate of the costs of
dismantling and removing the item and restoring the site, if any.
Plant and equipment under finance leases are stated at the lower
of present value of minimum lease payments or fair value less
the respective accumulated depreciation and any accumulated
impairment losses. Depreciation expense is recognized using the
straight-line method.
A residual value of the asset is considered. Property, plant and
equipment are depreciated over the following useful lives:
Leasing. Leasing includes all arrangements that transfer the right
to use a specified asset for a stated period of time in return
for a payment, even if the right to use such asset is not explicitly
described in an arrangement. The Group is a lessee of property,
plant and equipment and a lessor of its products, principally pas-
senger cars, trucks, vans and buses. It is evaluated on the basis
of the risks and rewards of a leased asset whether the ownership
of the leased asset is attributed to the lessee (finance lease) or
to the lessor (operating lease). Rent expense on operating leases
where the Group is lessee is recognized over the respective
lease terms on a straight-line basis. Equipment on operating leases
where the Group is lessor is carried initially at its acquisition or
manufacturing cost and is depreciated to its expected residual
value over the contractual term of the lease, on a straight-line
basis. The same accounting principles apply to assets if Daimler
sells such assets and leases them back from the buyer.
10 to 50 years
6 to 25 years
2 to 30 years
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment