Nokia 2004 Annual Report Download - page 150

Notes to the Consolidated Financial Statements (Continued)
8. Impairment
Common
Mobile Enterprise Group
2004 Phones Multimedia Solutions Networks Functions Group
EURm EURm EURm EURm EURm EURm
Impairment of available-for-sale investments — — — — 11 11
Impairment of capitalized development costs — — — 115 — 115
Total, net ............................. — — — 115 11 126
2003
EURm EURm EURm EURm EURm EURm
Customer finance impairment charges, net of
reversals ............................ — — — (226) — (226)
Impairment of goodwill ................. — — — 151 — 151
Impairment of available-for-sale investments — — — — 27 27
Impairment of capitalized development costs — — — 275 — 275
Total, net ............................. — — — 200 27 227
2002
EURm EURm EURm EURm EURm EURm
Customer finance impairment charges, net . . — — — 279 — 279
Impairment of goodwill ................. — — 61 121 — 182
Impairment of available-for-sale investments — — — — 77 77
Total, net ............................. — — 61 400 77 538
During 2004, Nokia recorded an impairment charge of EUR 65 million of capitalized development
costs due to the abandonment of FlexiGateway and Horizontal Technology modules. In addition, an
impairment charge of EUR 50 million was recorded on WCDMA radio access network program due
to changes in market outlook. The impairment loss was determined as the difference between the
carrying amount of the asset and its recoverable amount. The recoverable amount for WCDMA
radio access network was derived from the discounted cash flow projections, which covers the
estimated life of the WCDMA radio access network current technology, using a discount rate of
15%. The impaired technologies were part of Networks business group.
Relating to restructuring at Networks, Nokia recorded in 2003 EUR 206 million impairment of
capitalized development costs relating to the WCDMA 3G systems. In 2003 Nokia also recorded a
EUR 26 million and EUR 43 million impairment of capitalized development costs relating to
FlexiGateway and Metrosite systems, respectively. The impairment losses were determined as the
difference between the carrying amount of the asset and its recoverable amount. In determining
the recoverable amount, the Group calculated the present value of estimated discounted future
cash flows, using a 15% discount rate for WCDMA and FlexiGateway and 12% discount rate for
Metrosite, expected to arise from the continuing use of the asset and from its disposal at the end
of its useful life.
During 2002, Nokia recorded a net customer financing impairment charge of EUR 279 million. Of
this amount, EUR 292 million was an impairment charge to write down the loans receivable to
their estimated recoverable amount related to MobilCom and EUR 13 million was a partial
recovery received relating to amounts written off in 2001 related to Dophin. The impairment
charge recorded in 2002 relating to Mobilcom was substantially reversed in 2003 by EUR 226
F-25