Mercedes 2012 Annual Report Download - page 193

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Other intangible assets. Intangible assets acquired are
measured at cost less accumulated amortization. If necessary,
accumulated impairment losses are recognized.
Intangible assets with indefinite lives are reviewed annually
to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Intangible assets other than development costs with finite
useful lives are generally amortized on a straight-line basis over
their useful lives (3 to 10 years) and are tested for impairment
whenever there is an indication that the intangible asset may
be impaired. The amortization period for intangible assets with
finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
Development costs for vehicles and components are recog-
nized if the conditions for capitalization according to IAS38 are
met. Subsequent to initial recognition, the asset is carried
at cost less accumulated amortization and accumulated impair-
ment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized on
a straight-line basis over the expected product life cycle
(a maximum of 10 years). Amortization of capitalized develop-
ment costs is an element of the manufacturing costs and is
allocated to those vehicles and components by which they were
generated and is included in cost of sales when the inventory
(vehicles) is sold.
Property, plant and equipment. Property, plant and
equipment are measured at acquisition or manufacturing costs
less accumulated depreciation. If necessary, accumulated
impairment losses are recognized.
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Plant and equipment under finance leases are stated at the
lower of present value of minimum lease payments or fair value
less the respective accumulated depreciation and any accu-
mulated impairment losses. Depreciation expense is recognized
using the straight-line method. The residual value of the asset
is considered. Property, plant and equipment are depreciated
over the useful lives as shown in table  7.08.
Leasing. Leasing includes all arrangements that transfer
the right to use a specified asset for a stated period of time
in return for a payment, even if the right to use such asset
is not explicitly described in an arrangement. The Group is a les-
see of property, plant and equipment and a lessor of its
products. It is evaluated on the basis of the risks and rewards
of a leased asset whether the ownership of the leased asset
is attributed to the lessee (finance lease) or to the lessor (oper-
ating lease). Rent expense on operating leases by which the
Group is lessee is recognized over the respective lease terms
on a straight-line basis. Equipment on operating leases by which
the Group is lessor is carried initially at its acquisition or
manufacturing cost and is depreciated to its expected residual
value over the contractual term of the lease, on a straight-
line basis. The same accounting principles apply to assets if
Daimler sells such assets and leases them back from the buyer.
Impairment of non-current non-financial assets. Daimler
assesses at each reporting date whether there is an indication
that an asset may be impaired. If such indication exists,
Daimler estimates the recoverable amount of the asset. The
recoverable amount is determined for each individual asset unless
the asset generates cash inflows that are not largely inde-
pendent of those from other assets or groups of assets (cash
generating units). In addition, goodwill and other intangible
assets with indefinite useful lives are tested annually for impair-
ment; this takes place at the level of the cash generating
units. If the carrying amount of an asset or of a cash generating
unit exceeds the recoverable amount, an impairment loss
is recognized for the difference.
Useful lives of property, plant and equipment
Buildings and site improvements 10 to 50 years
Technical equipment and machinery 6 to 25 years
Other equipment, factory and office equipment 3 to 30 years
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