Reebok 2014 Annual Report Download - page 205

adidas Group
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2014 Annual Report
Consolidated Financial Statements
201
2014
Notes
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04.8
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Land leases are measured at the lower of the fair value or the present value of minimum lease payments and are
depreciated on a straight-line basis over the contractually agreed lease term.
Estimated useful lives are as follows:
Estimated useful lives of property, plant and equipment
Years
Land indefinite
Land leases 99
Buildings and leasehold improvements 20 – 50 1)
Technical equipment and machinery as well as other equipment and furniture and fixtures 2 – 10
1) Or, if shorter, the lease term/useful life (see Note 28).
Expenditures for repairs and maintenance are expensed as incurred. Renewals and improvements are capitalised
and depreciated separately, if the recognition criteria are met.
Impairment losses
If facts and circumstances indicate that non-current assets (e.g. property, plant and equipment, intangible assets
including goodwill and certain financial assets) might be impaired, the recoverable amount is determined. It is
measured at the higher of its fair value less costs to sell and value in use. Non-financial instruments measured
at the recoverable amount primarily relate to impaired property, plant and equipment being measured at
Level 3 according to IFRS 13 ‘Fair Value Measurement’ and taking unobservable inputs (e.g. profit or cash flow
planning) into account. The recoverable amount for furniture and fixtures in own-retail stores is calculated using
the discounted cash flow method as part of determining the profitability of the respective own-retail stores. An
impairment loss is recognised in other operating expenses or reported in goodwill impairment losses if the
carrying amount exceeds the recoverable amount. If there is an impairment loss for a cash-generating unit, first
the carrying amount of any goodwill allocated to the cash-generating unit is reduced. Subsequently, provided that
the recoverable amount is lower than the carrying amount, the other non-current assets of the unit are reduced
pro rata on the basis of the carrying amount of each asset in the unit.
Irrespective of whether there is an impairment indication, intangible assets with an indefinite useful life and
goodwill acquired in business combinations are tested annually for impairment.
An impairment loss recognised in goodwill is not reversible. With respect to all other impaired assets, an
impairment loss recognised in prior periods is reversed affecting the income statement if there has been a change
in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been determined (net of
depreciation or amortisation) if no impairment loss had been recognised.
Leases
Under finance lease arrangements, the substantial risks and rewards associated with an asset are transferred
to the lessee. At the beginning of the lease arrangement, the respective asset and a corresponding liability are
recognised at the fair value of the asset or, if lower, the net present value of the minimum lease payments.
For subsequent measurement, minimum lease payments are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as
to produce a constant periodic interest rate on the remaining balance of the liability. In addition, depreciation and
any impairment losses for the associated assets are recognised. Depreciation is performed over the lease term
or, if shorter, over the useful life of the asset.
Under operating lease agreements, rent expenses are recognised on a straight-line basis over the term of
the lease.