Nokia 2010 Annual Report Download - page 222

8. Impairment (Continued)
The Group has applied consistent valuation methodologies for each of the Group’s CGUs for the years
ended December 31, 2010, 2009 and 2008. The value in use is determined on a pretax value basis
using pretax valuation assumptions including pretax cash flows and pretax discount rate. As
marketbased rates of return for the Group’s cashgenerating units are available only on a posttax
basis, the pretax discount rates are derived by adjusting the posttax discount rates to reflect the
specific amount and timing of future tax cash flows. The discount rates applied in the impairment
testing for each CGU have been determined independently of capital structure reflecting current
assessments of the time value of money and relevant market risk premiums. Risk premiums included
in the determination of the discount rate reflect risks and uncertainties for which the future cash flow
estimates have not been adjusted. Overall, the discount rates applied in the 2010 impairment testing
have decreased in line with declining interest rates.
In 2009, the Group recorded an impairment loss of EUR 908 million to reduce the carrying amount of
the Nokia Siemens Networks CGU to its recoverable amount. The impairment loss was allocated in its
entirety to the carrying amount of goodwill arising from the formation of Nokia Siemens Networks
and from subsequent acquisitions completed by Nokia Siemens Networks. As a result of the
impairment loss, the amount of goodwill allocated to the Nokia Siemens Networks CGU has been
reduced to zero.
The goodwill impairment testing conducted for each of the Group’s CGUs for the year ended
December 31, 2008 did not result in any impairment charges.
Other intangible assets
In 2010 and 2008, the Group did not recognise any impairment charges on other intangible assets. In
conjunction with the Group’s decision to refocus its activities around specified core assets, the Group
recorded impairment charges in 2009 totalling EUR 56 million for intangible assets arising from the
acquisitions of Enpocket and Intellisync and the asset acquisition of Twango. The impairment charge
was recognised in other operating expense and is included in the Devices & Services segment.
Property, plant and equipment and inventories
In 2010, the Group did not recognise any impairment charges with respect to property, plant and
equipment and inventories. In 2008, resulting from the Group’s decision to discontinue the
production of mobile devices in Germany, an impairment loss was recognised amounting to EUR
55 million. The impairment loss related to the closure and sale of production facilities at Bochum,
Germany during 2008 and is included in the Devices & Services segment.
In 2008, Nokia Siemens Networks recognised an impairment loss amounting to EUR 35 million
relating to the sale of its manufacturing site in Durach, Germany. The impairment loss was
determined as the excess of the book value of transferring assets over the fair value less costs to sell
for the transferring assets. The impairment loss was allocated to property, plant and equipment and
inventories.
Investments in associated companies
In 2010, the Group did not recognise any impairment charges on its investments in associated
companies. After application of the equity method, including recognition of the Group’s share of
results of associated companies, the Group determined that recognition of impairment losses of
EUR 19 million in 2009 and EUR 8 million in 2008 was necessary to adjust the Group’s investment in
associated companies to its recoverable amount.
F34
Notes to the Consolidated Financial Statements (Continued)