HSBC 2009 Annual Report Download - page 381

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a cash-generating unit. If the recoverable amount is less than the carrying value, an impairment loss is
charged to the income statement. Goodwill is stated at cost less accumulated impairment losses.
Goodwill on acquisitions of interests in joint ventures and associates is included in ‘Interests in associates
and joint ventures’ and is not tested separately for impairment.
At the date of disposal of a business, attributable goodwill is included in HSBC’s share of net assets in the
calculation of the gain or loss on disposal.
(ii) Intangible assets include the present value of in-force long-term insurance business, computer software,
trade names, mortgage servicing rights, customer lists, core deposit relationships, credit card customer
relationships and merchant or other loan relationships. Intangible assets are subject to impairment review if
there are events or changes in circumstances that indicate that the carrying amount may not be recoverable.
Where:
– intangible assets have an indefinite useful life, or are not yet ready for use, they are tested for
impairment annually. This impairment test may be performed at any time during the year, provided it is
performed at the same time every year. An intangible asset recognised during the current period is
tested before the end of the current year; and
– intangible assets have a finite useful life, except for the present value of in-force long-term insurance
business, they are stated at cost less amortisation and accumulated impairment losses and are amortised
over their estimated useful lives. Estimated useful life is the lower of legal duration and expected useful
life. The amortisation of mortgage servicing rights is included within ‘Net fee income’.
For the accounting policy governing the present value of in-force long-term insurance business (see
Note 2y).
(iii) Intangible assets with finite useful lives are amortised, generally on a straight-line basis, over their useful
lives as follows:
Trade names ........................................................................................................................... 10 years
Mortgage servicing rights ...................................................................................................... generally between 5 and 12 years
Internally generated software ................................................................................................. between 3 and 5 years
Purchased software ................................................................................................................. between 3 and 5 years
Customer/merchant relationships ........................................................................................... between 3 and 10 years
Other ....................................................................................................................................... generally 10 years
(q) Property, plant and equipment
Land and buildings are stated at historical cost, or fair value at the date of transition to IFRSs (‘deemed cost’),
less any impairment losses and depreciation calculated to write-off the assets over their estimated useful lives as
follows:
– freehold land is not depreciated;
– freehold buildings are depreciated at the greater of two per cent per annum on a straight-line basis or over
their remaining useful lives; and
– leasehold buildings are depreciated over the unexpired terms of the leases, or over their remaining useful
lives.
Equipment, fixtures and fittings (including equipment on operating leases where HSBC is the lessor) are stated
at cost less any impairment losses and depreciation calculated on a straight-line basis to write-off the assets over
their useful lives, which run to a maximum of 35 years but are generally between 5 years and 20 years.
Property, plant and equipment is subject to an impairment review if there are events or changes in circumstances
which indicate that the carrying amount may not be recoverable.
HSBC holds certain properties as investments to earn rentals or for capital appreciation, or both. Investment
properties are included in the balance sheet at fair value with changes therein recognised in the income statement
in the period of change. Fair values are determined by independent professional valuers who apply recognised
valuation techniques.