Annual Report 2023

Man­age­ment estimates the useful economic lives and residual values of intangible assets based on the anticipated period over which economic benefits will accrue to the Company from the use of the assets. Useful economic lives are reviewed annually based on historical and forecast ex­pec­ta­tions concerning future tech­no­log­i­cal de­vel­op­ments, economic and legal changes as well as further external factors.

Intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses. Subsequent expenditure in intangible assets is capitalized if it increases the future economic benefits embodied in the specific asset to which it relates. They are amortized on a straight-line basis over their estimated useful lives from the time at which they become available for use.

The estimated useful lives applied by the Group are as follows:

If there is any impairment indication at the reporting date, the recoverable amount is determined. The recoverable amount is the higher of the asset’s fair value less costs of disposal and its value in use. To determine the value in use, the estimated future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. An impairment loss is recognized in the income statement, if the carrying amount of an asset or of the cash-generating unit to which the asset belongs exceeds the recoverable amount.

Internally generated intangible assets include capitalized development costs. Development costs incurred to obtain new or substantially improved products and processes are capitalized if the resulting products and processes are technically and commercially feasible and if it is probable that they will generate future economic benefits. In addition, the Group must intend and have sufficient resources available to complete the development and to use or sell the asset. Development costs previously recognized as expenses are not recognized as assets in subsequent periods. Capitalized development costs of projects that have not yet been completed are not amortized but subject to an annual impairment test. Research costs incurred to gain new basic or technological knowledge and understanding are recognized in the income statement.