DHL 2004 Annual Report Download - page 92

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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 amort ized
cost. The write-downs are reversed if the reasons for the impair-
ment losses no longer apply.
Up to December 31, 2004, goodwill that arose up until
March 31, 2004, including goodwill from capital consolidation,
was capitalized in accordance with IAS 22 and reduced by straight-
line amortization over a useful life of 15 to 20 years. The useful life
was determined in particular by the strategic import ance to the
Group of the underlying acquisitions. Additions during the year
under review were amortized ratably. Goodwill was tested for im-
pairment on a regular basis. If there were indications of impairment,
appropriate impairment tests were carried out. This procedure
only applied until December 31, 2004, when it was replaced by
IFRS 3 (Business Combinations). For detailed information, see also
note 2 “Significant differences between International Financial
Reporting Standards and German accounting principles” and note
5 “A look forward to IFRS changes for fiscal year 2005”.
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, produc-
tion costs include an appropriate share of attributable production
overheads. 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
equipment 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 in years 2003 2004
Buildings 6 to 80 5 to 50
Technical equipment and machinery 3 to 13 3 to 10
Passenger vehicles 3 to 8 4 to 6
Trucks 3 to 8 5 to 8
Aircraft 15 to 20 15 to 20
Other vehicles 4 to 10 3 to 8
IT systems 3 to 10 3 to 8
Other operating and office equipment 4 to 10 3 to 10
Items of property, plant and equipment 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.
Finance leases
In accordance with IAS 17, beneficial ownership of leased assets is
transferred to the lessee if the lessee bears substantially all the risk
and rewards incident to ownership of the asset. Where Deutsche
Post World Net is the beneficial owner, the asset is capitalized at
the date of inception of the lease either at the fair value or at the
present value of the minimum lease payments, if this is less than
the fair value. Depreciation methods and useful lives correspond
to those of comparable purchased assets.
Noncurrent financial assets
Investments in associates are carried at equity in accordance with
IAS 28 (Accounting for Investments in Associates). Based on the
cost of acquisition at the time of purchase of the investments, the
carrying amount of the investments is increased or reduced to
reflect changes in the equity of the associates attributable to the
investments of Deutsche Post AG. Goodwill that is contained in
the carrying amounts of the investments and that was acquired
before March 31, 2004, is treated in accordance with IAS 22 (up
to December 31, 2004), while goodwill arising after this date is
accounted for in accordance with IFRS 3. For further details, see
notes 2 and 5.
Other noncurrent financial assets include in particular
investments in unconsolidated subsidiaries, financial instruments,
and other equity investments. Under IAS 39, noncurrent financial
assets are classified as “available for sale” or “held to maturity”, or
as “loans and receivables originated by the enterprise” (originated
loans and receivables).
Available-for-sale financial instruments are carried at their
fair value, where this can be measured reliably. Changes in fair value
between reporting dates are generally recognized directly in the
revaluation reserve. This reserve is reversed to income either when
the assets are sold or otherwise disposed of, or if the fair value of the
assets falls more than temporarily below their cost.
Held-to-maturity financial instruments are carried at amor-
tized cost at the balance sheet date. Impairment losses are charged to
income if the recoverable amount falls below the carrying amount.
Financial instruments classified as loans and receivables
orig inated by the enterprise, which include long-term loans, are
measured at amortized cost.
Inventories
Finished goods and goods purchased and held for resale are carried
at the lower of cost or net realizable value. Valuation allowances are
charged for obsolete inventories and for slow-moving goods.
Receivables and other assets
Unless held for trading, receivables and other assets are carried
at amortized cost at the balance sheet date. Doubtful receivables
are carried at their principal amount, less appropriate specific
allowances.