Page 36 - KELAG Annual Report 2017
P. 36

Borrowing costs are capitalised in the Group when the requirements of a qualifying asset are met.
           The accounting principles this is based on provide that a project only becomes a qualifying asset
           if the construction period is longer than six months and the forecast production cost exceeds a
           materiality threshold of EUR 2.0m. If the qualifying asset is financed by means of a loan, the actual
           borrowing costs are capitalised. If, however, the asset is financed by means of group financing,
           average borrowing costs are capitalised. The average cost of capital for investments made in the
           financial year 2017 amounts to 2.65% (prior year: 2.85%).

           The  carrying  amounts  of  associates  accounted  for  using  the  equity  method  are  tested  for
           impairment on the basis of forecasts for future cash flows as well as using a discount rate adjusted
           to the industry and the company risk (see Note 12).

           If the following indications in accordance with IAS 39 arise, the carrying amounts of associates
           accounted for using the equity method are tested for impairment:

               Substantial financial difficulties on the part of the investee;
               Breach of contract, such as default or delayed interest or principal payment;
               An increased likelihood that the investee will enter bankruptcy or other financial
               Observable data that indicate a measurable decrease in the estimated future cash flows of the

           Goodwill and intangible assets with an indefinite useful life are tested for impairment at each
           reporting date. The recoverability of other non-financial assets is reassessed if there are internal
           or external indications of possible impairment. The following indicators are examples of when a
           non-financial asset would be tested for impairment:

               Decrease in the market value (above and beyond depreciation);
               Adverse changes in the technological, market-related economic or legal environment;
               Increase in the market interest rates;
               Obsolescence or physical damage;
               Lower economic performance of an asset than expected.

           The  calculation  of  a  possible  impairment  loss  (see  Notes  10  and  11)  of  a  non-financial  asset
           necessitates the calculation of the value in use or fair value of the cash-generating unit to which
           the non-financial asset is allocated. Calculation of the value in use is based on estimates of future
           cash flows of the cash-generating unit, taking account of the risks, and an appropriate discount
           rate.  When  calculating  the  value  in  use,  no  investments  in  expansions  or  restructuring  are
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