DHL 2003 Annual Report Download - page 106
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Goodwill resulting from the capital consolidation of foreign
companies is translated at the rates prevailing at the transaction dates
and amortized over its useful life.
The following exchange rates were generally applied to foreign
currency translation in the Group:
The carrying amounts of non-monetary assets recognized in
the case of consolidated companies operating in hyperinflationary
economies are indexed in accordance with IAS 29 and thus reflect
the current purchasing power at the balance sheet date.
In accordance with IAS 21, receivables and liabilities in the
single-entity financial statements of consolidated companies that
have been prepared in local currencies are translated at the closing
rate. Currency translation differences are recognized in other oper-
ating income and expenses in the income statement. In fiscal year
2003, other operating income of €125 million and other operating
expenses of €71 million resulted from currency translation differ-
ences.
Accounting policies
Revenue and expense recognition
Revenue and income from banking transactions, as well as other
operating income, is generally recognized when services are rendered,
the amount of revenue and income can be reliably measured and it
is probable that the economic benefits from the transactions will
flow to the Group.
Operating expenses are recognized when the service is utilized
or when the expenses are incurred.
Intangible assets
Purchased intangible assets are carried at cost. Internally generated
intangible assets are carried at cost if the criteria for recognition as
an asset are satisfied. This is the case in particular if future economic
benefits are expected to flow from the assets. At Deutsche Post World
Net, these relate only to internally developed software. In addition
to direct costs, the production cost of internally developed software
includes an appropriate share of attributable production overheads.
Any borrowing costs are not included in production costs. Value
added tax arising in conjunction with the acquisition or production
of intangible assets is included in the cost if it cannot be deducted
as input tax.
6
Intangible assets are reduced by straight-line amortization
over their useful lives. Capitalized software is amortized over two to
six years, licenses over the term of the license agreement. Intangible
assets are written down if there are indications of impairment and
if the recoverable amount is lower than amortized cost. The write-
downs are reversed if the reasons for the impairment losses no
longer apply.
Goodwill, including goodwill from capital consolidation, is
capitalized in accordance with IAS 22 and normally reduced by
straight-line amortization over a useful life of 15 to 20 years. The
useful life is determined in particular by the strategic importance
to the Group of the underlying acquisitions. Additions during
the year under review are amortized ratably. Goodwill is regularly
tested for impairment and is written down if there are indications
of impairment.
The negative goodwill from the first-time consolidation of
the Deutsche Postbank group was reversed in full in the previous
year.
Property, plant, and equipment
Property, plant, and equipment is carried at cost and reduced by
depreciation for wear and tear. In addition to direct costs, production
costs include an appropriate share of attributable production over-
heads. Borrowing costs are not included in production costs but
are expensed directly. Value added tax arising in conjunction with
the acquisition or production of items of property, plant, and equip-
ment is included in the cost if it cannot be deducted as input tax.
Depreciation is generally charged using the straight-line method.
Deutsche Post World Net applies the following useful lives:
Useful lives
Years
Buildings 6 to 80
Technical equipment and machinery 3 to 13
Passenger vehicles 3 to 8
Trucks 3 to 8
Aircraft 15 to 20
Other vehicles 4 to 10
IT systems 3 to 10
Other operating and office equipment 4 to 10
Foreign currency translation
Country Currency Closing rates Average rates
2002 2003 2002 2003
€1 = €1 = €1 = €1 =
USA USD 1.04220 1.24990 0.944756 1.13080
Switzerland CHF 1.45480 1.55940 1.467149 1.52090
United Kingdom GBP 0.65000 0.70390 0.628732 0.69190
Sweden SEK 9.15580 9.06880 9.158917 9.12450