Snapple 2012 Annual Report Download - page 73

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
55
Property, Plant and Equipment
Property, plant and equipment is stated at cost plus capitalized interest on borrowings during the actual construction period
of major capital projects, net of accumulated depreciation. Significant improvements which substantially extend the useful lives
of assets are capitalized. The costs of major rebuilds and replacements of plant and equipment are capitalized and expenditures
for repairs and maintenance which do not improve or extend the life of the assets are expensed as incurred. When property, plant
and equipment is sold or retired, the costs and the related accumulated depreciation are removed from the accounts, and any net
gain or loss is recorded in other operating expense (income), net in the Consolidated Statements of Income. Refer to Note 4 for
further information.
For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful asset lives
as follows:
Type of Asset Useful Life
Buildings 40 years
Building improvements 5 to 25 years
Machinery and equipment 3 to 23 years
Vehicles 6 to 12 years
Cold drink equipment 3 to 7 years
Computer software 3 to 5 years
Leasehold improvements are depreciated over the shorter of the estimated useful life of the assets or the lease term. Estimated
useful lives are periodically reviewed and, when warranted, are updated.
The Company periodically reviews long-lived assets for impairment whenever events or changes in circumstances indicate
that their carrying amount may not be recoverable. In order to assess recoverability, DPS compares the estimated undiscounted
future pre-tax cash flows from the use of the asset or group of assets, as defined, to the carrying amount of such assets. Measurement
of an impairment loss is based on the excess of the carrying amount of the asset or group of assets over the long-lived asset's fair
value. During the years ended December 31, 2012 and 2011, no analysis was warranted.
Goodwill and Other Intangible Assets
The Company classifies intangible assets into two categories: (1) intangible assets with definite lives subject to amortization
and (2) intangible assets with indefinite lives not subject to amortization. The majority of the Company's intangible asset balance
is made up of brands which the Company has determined to have indefinite useful lives. In arriving at the conclusion that a brand
has an indefinite useful life, management reviews factors such as size, diversification and market share of each brand. Management
expects to acquire, hold and support brands for an indefinite period through consumer marketing and promotional support. The
Company also considers factors such as its ability to continue to protect the legal rights that arise from these brand names indefinitely
or the absence of any regulatory, economic or competitive factors that could truncate the life of the brand name. If the criteria are
not met to assign an indefinite life, the brand is amortized over its expected useful life.
Identifiable intangible assets deemed by the Company to have determinable finite useful lives are amortized on a straight-line
basis over their estimated useful lives as follows:
Type of Intangible Asset Useful Life
Brands 10 years
Bottler agreements 10 to 15 years
Customer relationships 10 years
Distribution rights 5 years
DPS conducts tests for impairment in accordance with U.S. GAAP. For intangible assets with definite lives, tests for impairment
are performed if conditions exist that indicate the carrying value may not be recoverable. For goodwill and indefinite lived intangible
assets, the Company conducts tests for impairment annually, as of December 31, or more frequently if events or circumstances
indicate the carrying amount may not be recoverable. We use present value and other valuation techniques to make this assessment.