Nokia 2005 Annual Report Download - page 167

Notes to the Consolidated Financial Statements (Continued)
9. Impairment (Continued)
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.
The impairment charge recorded in 2002 relating to Mobilcom was substantially reversed in 2003
by EUR 226 million as a result of the company receiving repayment of the Mobilcom loans
receivables in the form of subordinated convertible perpetual bonds of France Telecom. See
Notes 12, 17 and 22.
The Group has evaluated the carrying value of goodwill arising from certain acquisitions by
determining if the carrying values of the net assets of the cash generating unit to which the
goodwill belongs exceeds the recoverable amounts of that unit. In 2003, in the Networks business,
the Group recorded an impairment charge of EUR 151 million on goodwill related to the
acquisition of Amber Networks. The recoverable amount for Amber Networks was derived from
the value in use discounted cash flow projections, which cover the estimated life of the Amber
platform technology, using a discount rate of 15%. The impairment was a result of significant
declines in the market outlook for products under development.
During 2005 the Group’s investment in certain equity securities suffered a permanent decline in
fair value resulting in an impairment charge of EUR 30 million relating to non-current available-
for-sale investments (EUR 11 million in 2004 and EUR 27 million in 2003).
10. Acquisitions
In 2003, the Group made three minor purchase acquisitions for a total consideration of EUR 38
million, of which EUR 20 million was in cash and EUR 18 million in non-cash consideration.
11. Depreciation and amortization
Depreciation and amortization by function
Cost of sales ...................................................... 242 196 214
Research and development .......................................... 349 431 537
Selling and marketing .............................................. 914 23
Administrative and general .......................................... 99 123 162
Other operating expenses ........................................... 13 843
Amortization of goodwill ............................................ —96 159
Total ............................................................ 712 868 1,138
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