Porsche 2011 Annual Report Download - page 158

Intangible assets
Purchased intangible assets that are not acquired in a business combination are initially recognized at
cost in accordance with IAS 38. The cost of intangible assets acquired as part of a business combination is
their fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost
less any accumulated amortization and any accumulated impairment losses.
The useful lives of intangible assets are assessed as either finite or indefinite.
Purchased intangible assets with a finite useful life are amortized on a straight-line basis over their
useful life, taking any impairments into account. Useful lives generally range from three to five years. Useful
lives, residual values and methods of amortization are reviewed, and adjusted if appropriate, at least at the end
of the reporting year. If adjustments are made, these are accounted for as changes in estimates.
Intangible assets with indefinite useful lives are not amortized. These include goodwill and brand
names from business combinations. The useful lives of brands are considered indefinite based on the
assessment that the inflow of economic benefits from these assets cannot be attributed to a specific period.
Each asset or cash-generating unit is tested at least once a year for impairment. Intangible assets with
indefinite useful lives are reviewed once a year to determine whether the indefinite life assessment continues to
be supportable. If this is no longer the case, the change in the useful life assessment from indefinite to finite is
made prospectively.
With the exception of their capitalizable portion, development costs are not capitalized, but recognized
in profit or loss in the period in which they are incurred. The portion of development expenditure that can be
measured reliably and meets all other recognition criteria of IAS 38 is capitalized. The capitalized development
costs include all costs and overhead expenditure directly attributable to the development process incurred after
the point in time at which all recognition criteria are met. Capitalized development costs are amortized
beginning at the start of production using the straight-line method over the expected useful life of the product,
taking any impairments into account. The useful life is usually five to ten years. Research costs are expensed
as incurred.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation over the
useful life of the assets and any accumulated impairment losses. The cost of items of property, plant and
equipment acquired as part of a business combination is the fair value as of the date of acquisition. Self-
constructed items of property, plant and equipment are recognized at cost. Cost is determined on the basis of
the direct and the proportionate indirect production-related costs. Grants are generally deducted from cost.
Costs for repairs and maintenance are recognized as an expense.
158 FINANCIALS