Nokia 2011 Annual Report Download - page 223

Capitalized development costs are subject to regular assessments of recoverability based on
anticipated future revenues, including the impact of changes in technology. Unamortized capitalized
development costs determined to be in excess of their recoverable amounts are expensed
immediately.
Other intangible assets
Acquired patents, trademarks, licenses, software licenses for internal use, customer relationships and
developed technology are capitalized and amortized using the straight-line method over their useful
lives, generally 3 to 7 years. Where an indication of impairment exists, the carrying amount of the
related intangible asset is assessed for recoverability. Any resulting impairment losses are recognized
immediately in the income statement.
Pensions
The Group companies have various pension schemes in accordance with the local conditions and
practices in the countries in which they operate. The schemes are generally funded through payments
to insurance companies or contributions to trustee-administered funds as determined by periodic
actuarial calculations.
In a defined contribution plan, the Group has no legal or constructive obligation to make any additional
contributions even if the party receiving the contributions is unable to pay the pension obligations in
question. The Group’s contributions to defined contribution plans, multi-employer and insured plans are
recognized in the income statement in a period which the contributions relate to.
If a pension plan is funded through an insurance contract where the Group does not retain any legal or
constructive obligations, the plan is treated as a defined contribution plan. All arrangements that do not
fulfill these conditions are considered defined benefit plans.
For defined benefit plans, pension costs are assessed using the projected unit credit method: Pension
cost is recognized in the income statement so as to spread the service cost over the service lives of
employees. Pension obligation is measured as the present value of the estimated future cash outflows
using interest rates on high quality corporate bonds with appropriate maturities. Actuarial gains and
losses outside corridor are recognized over the average remaining service lives of employees. The
corridor is defined as ten percent of the greater of the value of plan assets or defined benefit obligation
at the beginning of the respective year. Actuarial gains and losses within the corridor limits are not
recognized.
Past service costs are recognized immediately in income, unless the changes to the pension plan are
conditional on the employees remaining in service for a specified period of time (the vesting period). In
this case, the past service costs are amortized on a straight-line basis over the vesting period.
The liability (or asset) recognized in the statement of financial position is pension obligation at the
closing date less the fair value of plan assets, the share of unrecognized actuarial gains and losses,
and past service costs. Any net pension asset is limited to unrecognized actuarial losses, past service
cost, the present value of available refunds from the plan and expected reductions in future
contributions to the plan.
Actuarial valuations for the Group’s defined benefit pension plans are performed annually. In addition,
actuarial valuations are performed when a curtailment or settlement of a defined benefit plan occurs in
the Group.
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