Page 25 - Annual Report KELAG Group 2018
P. 25

The Group classifies its assets and liabilities in the statement of financial position into current and
                                      non-current items.

                                      The  rolling  once-yearly  settlement  of  end  customer  transactions  should  be  regarded  as  an
                                      indication for determining the business cycle in accordance with IAS 1.68. The KELAG Group’s
                                      normal business cycle is therefore 12 months and thus defines the classification of current and
                                      non-current assets and liabilities.

                                      Deferred tax assets and liabilities are not classified as current assets or liabilities.

                                      Business combinations are accounted for by comparing the consideration paid (plus any non-
                                      controlling  interest)  with  the  fair  value  of  the  net  assets  acquired  to  determine  a  potential
                                      difference from the business combination.

                                      If  the  difference  is  negative,  the  calculation  of  consideration  paid  and  the  purchase  price
                                      allocation must be reassessed. If the difference is still negative after the reassessment, this is
                                      recognised in the income statement.

                                      Any  positive  difference  is  recognised  as  goodwill.  The  goodwill  is  allocated  to  those  cash-
                                      generating units (CGU) that are expected to benefit from the synergies resulting from a business
                                      combination. These cash-generating units correspond to the lowest level at which management
                                      monitors the goodwill for internal management purposes.

                                      In the KELAG Group, the annual impairment test of goodwill at the level of the cash-generating
                                      units takes place in the fourth quarter of the reporting period based on the mid-range planning,
                                      unless an indication for impairment has been identified at an earlier point in time. In addition to
                                      the  annual  impairment  testing,  the  Group  performs  a  quality-focused  analysis  to  identify
                                      indications of impairment as of the date of the half-yearly financial statements. If any indications
                                      of impairment are identified, the Group performs an (additional) impairment test.

                                      The KELAG Group defines its cash-generating units based on the fact that the cash inflows of the
                                      corresponding asset are largely independent.

                                      In accordance with IAS 38, acquired intangible assets are measured at cost and any impairment
                                      losses less straight-line amortisation, provided that they do not have an indefinite useful life. The
                                      cost of long-term projects includes borrowing costs (see the explanations on judgements for
                                      more details) if the recognition criteria are met. The useful life of water usage rights and other
                                      rights of use is measured using the useful life of the facilities or based on contractual agreements.
                                      In the KELAG Group, software is always amortised over a period of four or five years. Software
                                      developed to the Group’s specifications is amortised over 10 years.
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