40 / 164
CONSOLIDATED FINANCIAL STATEMENTS
40
LISI 2015 FINANCIAL REPORT
Under the IFRS framework, development costs (i.e., costs
incurred by applying the results of research to a plan or model
in order to develop new or substantially improved products
and processes) are recorded as fixed assets if the Group can
demonstrate that future economic benefits are probable.
The LISI Group’s development costs primarily relate mainly
to products which are being developed through very close
collaboration with clients, rather than to improvements in
processes.
Due to the nature of the LISI Group’s research and development
costs, most such costs do not meet the criteria for capitalization
as intangible fixed assets; they are therefore recorded as
expenses. The Group carries out regular assessments of
major projects in order to identify any costs which could be
capitalized.
2.2.7.3 Other intangible assets
Concessions,trademarksandsoftwareprogramsarerecognized
at historic cost and are subject to a depreciation plan. Intangible
fixed assets acquired through a business combination are
recognized at their acquisition-date fair value. Intangible fixed
assets with finite useful lives are subject to depreciation over
this period, while intangible fixed assets with indefinite useful
lives are subject to an impairment test for every new balance
sheet.
Subsequent expenditure relating to an intangible fixed asset
is only capitalized if it increases the future economic benefits
that are attributable to the specific asset in question. Other
expenditure is recognized as an expense when incurred.
Depreciation is recognized as an expense using the straight-
line method over the estimated useful life of the intangible
fixed assets, unless the useful life cannot be estimated.
Standard estimated useful lives are as follows:
■■
Trademarks: 10-20 years;
■■
Software programs: 1-5 years.
2.2.8 Tangible assets
2.2.8.1 Assets owned by the LISI Group
Tangible fixed assets are recorded at diminished cost with
accumulated depreciations and impairments. The cost of an
asset produced by the Group for itself includes the costs of raw
materials, direct manpower, and an estimate, if applicable,
of costs related to the removal and dismantling of the asset
and the repair of the site at which it is located, along with an
appropriate share of the general production costs.
When the components of tangible fixed assets have different
useful lives, they are recorded as separate tangible fixed assets,
as per the components method.
2.2.8.2 Assets funded through finance leases
Leases which transfer virtually all the risks and benefits
relating to the ownership of an asset to the Group are
considered as finance leases. Assets funded through finance
leases are recognized in the assets side of the balance sheet
at the fair value of the goods leased, or the present value of
the minimum lease payments if this is lower. These assets are
depreciated over the same period as goods of the same type
which are owned outright. The corresponding debt is entered
on the liabilities side of the balance sheet.
2.2.8.3 Subsequent expenditure
When calculating the book value of a tangible fixed asset, the
Group recognizes the cost of replacing a component of this
tangible fixed asset at the time when the cost is incurred, if it is
likely that future economic benefits associated with this asset
will flow to the Group and the cost can be reliably estimated. All
ongoing servicing and maintenance costs are recognized as an
expense when they are incurred.
2.2.8.4 Depreciation
Depreciation is recognized as an expense using the straight-
line method over the estimated useful life for each component
of a tangible fixed asset.
Land is not depreciated.
Estimated useful lives are as follows:
■■
buildings: 20-40 years;
■■
plant and machinery: 10-15 years;
■■
fixtures and fittings: 5-15 years;
■■
transport equipment: 5 years;
■■
equipment and tools: 10 years;
■■
office equipment: 5 years;
■■
office furniture: 10 years;
■■
IT hardware: 3 years.
2.2.8.5 Impairment of assets
Goodwill and intangible fixed assets of indefinite life-span are
submitted to an impairment test at each annual close (see note
2.2.7.1) and each time events or market-changingmodifications
indicate a risk of impairment. Other intangible assets fixed and
tangible fixed assets are also subject to such a test at any time
when there is a risk of loss of value.
The method used involves comparing the recoverable value of
each of the Group’s cash-generating units with the net book
value of the corresponding assets (including the goodwill).
The recoverable value is calculated for each asset individually,
unless the asset under consideration does not generate cash