TomTom 2014 Annual Report Download - page 63

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Internally generated databases are capitalised until a certain level of map coverage is reached and ongoing activities focus on maintenance.
At this point, capitalisation is discontinued.
Internal software costs relating to development of non-core software with an estimated average useful life of less than one year and
engineering costs relating to the detailed manufacturing design of new products are expensed in the period in which they are incurred.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the
intangible asset first meets the recognition criteria listed above.
All expenditures on research activities are expensed in the income statement as incurred.
Acquired intangible assets
Definite-lived intangible assets acquired separately are initially recognised at cost. The cost of assets acquired separately includes directly
attributable costs to bring the asset to its intended use. Intangible assets acquired in a business combination are identified and recognised
separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of
such intangible assets is their fair value at the acquisition date.
Subsequent to initial recognition, all intangible assets other than goodwill are carried at cost less accumulated amortisation and accumulated
impairment losses.
The amortisation of other intangible assets is recorded on a straight-line basis over the following estimated useful lives as follows:
• Internally generated core technology: 3-5 years
• Databases and tools: 5-20 years
• Customer relationships: 5-27 years
• Computer software: 2-5 years
• Acquired technology: 4-5 years
Customer relationships include customers for maps; there is a high cost involved in changing map providers and historically there is a high
customer retention.
Significant estimates
Management made use of assumptions and judgement in assessing the expected future economic benefits that can be attributed to the
internally generated technology, databases and tools, as well as their expected useful lives. For internally generated databases, assumption
is also made on the level of completion, at which point the capitalisation is discontinued and future activities are considered as maintenance.
Such estimates are made on a regular basis, as they can be significantly affected by changes in technology and other factors.
CONTENTS OVERVIEW MANAGEMENT
BOARD REPORT CORPORATE
GOVERNANCE SUPERVISORY
BOARD REPORT FINANCIAL
STATEMENTS SUPPLEMENTARY
INFORMATION
ANNUAL REPORT AND ACCOUNTS 2014 / 63