Reebok 2015 Annual Report Download - page 200

CONSOLIDATED FINANCIAL STATEMENTS
Notes
196
4
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.
Goodwill
Goodwill is an asset representing the future economic benefits arising from assets acquired in a business
combination that are not individually identified and separately recognised. This results when the purchase
cost exceeds the fair value of acquired identifiable assets, liabilities and contingent liabilities. Goodwill
arising from the acquisition of a foreign entity and any fair value adjustments to the carrying amounts
of assets, liabilities and contingent liabilities of that foreign entity are treated as assets, liabilities and
contingent liabilities of the respective reporting entity, and are translated at exchange rates prevailing at the
date of the initial consolidation. Goodwill is carried in the functional currency of the acquired foreign entity.
Acquired goodwill is valued at cost and is tested for impairment on an annual basis and additionally
when there are indications of potential impairment.
Intangible assets (except goodwill)
Intangible assets are valued at amortised cost. Amortisation is calculated on a straight-line basis taking
into account any potential residual value.
Expenditures during the development phase of internally generated intangible assets are capitalised
as incurred if they qualify for recognition under IAS 38 ‘Intangible Assets’.
Estimated useful lives are as follows:
ESTIMATED USEFUL LIVES OF INTANGIBLE ASSETS
Years
Trademarks indefinite
Software 5 – 7
Patents, trademarks and concessions 2 – 15
Research and development
Research costs are expensed in full as incurred. Development costs are also expensed as incurred if they
do not meet the recognition criteria of IAS 38 ‘Intangible Assets’.
Financial assets
All purchases and sales of financial assets are recognised on the trade date. Costs of purchases include
transaction costs. Available-for-sale financial assets include non-derivative financial assets which are not
allocable under another category of IAS 39. If their respective fair value can be measured reliably, they
are subsequently carried at fair value. If this is not the case, these are measured at cost. Realised and
unrealised gains and losses arising from changes in the fair value of financial assets are included in the
income statement for the period in which they arise, except for available-for-sale financial assets where
unrealised gains and losses are recognised in equity unless they are impaired.