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ANNUAL REPORT 2011
minus accumulated impairment losses. Gains or
losses from the sale of an entity include the value
of the consolidation differences in reference to the
said entity.
Consolidation differences are allocated to the
units that generate the cash flows for performing
impairment tests.
b) Research and development
Research expenses are recognised as costs when
incurred.Costsincurredondevelopmentprojects(for
designing and testing new products or for product
improvements) are recognised as intangible assets
when it is likely that the project will be successful, in
terms of its commercial and technological feasibility
andwhen the costsmay be reliablymeasured. Other
development expenses are recognised as expenses
when incurred. Developments costs previously
recognised as expenses are not recognised as an
asset in subsequent periods. Development costs
with a finite lifetime that have been capitalised
are amortised from the time the product begins
commercial production according to the equal
annual amounts method during the period of its
expected benefit, which cannot exceed five years.
c) Software
The cost of acquiring software licences is capitalised
and includes all costs incurred for acquiring and
installing the software available for utilisation.
These costs are amortised during the estimated
lifetime (5 years).
Software development or maintenance costs are
recognised as expenses when incurred. Costs
associated directly with creating identifiable and
unique software controlled by the Group and that
will probably generate future economic benefits
greater than the costs, for more than one year, are
recognised as intangible assets. Direct costs include
personnel costs for developing software and the
share in relevant general expenses.
Software development costs recognised as assets
are amortised during the software’s estimated
lifetime (not exceeding 5 years).
d) Concessions and territorial rights
Concessions and territorial rights are presented at
the historic cost. Concessions and territorial rights
have a finite lifetime associated to the contractual
periods and are presented at cost minus
accumulated amortisation.
2.7. Impairment of assets
Intangible assets with a specific lifetime are not
subject to amortisation and are, instead, subject
to annual impairment tests. Assets subject to
amortisation are revaluated to determine any