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ACCOUNTING POLICIES
Intangible assets
An identifiable non-monetary asset without physical substance, such as:
Intangible assets are initially recognised at cost if they are acquired in separate transactions (for development work). Subsequent to initial recognition, intangible assets are carried at cost less accumulated amortisation and impairment losses. Expenditure incurred on internally generated intangible assets, excluding capitalised development costs, is not capitalised and is charged against profits in the period in which it is incurred.
The Group assesses whether the useful life of intangible assets is definite or indefinite. If the useful life is definite, the Group estimates the length of useful period, the volume of production or other measures as the basis to define the useful life. An intangible asset is regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group.
The amount of an intangible asset with a definite useful life subject to amortisation is amortised on a systematic basis over its useful life. Amortisation starts on the first day of the month following the month in which the asset is available for use.
Intangible assets with indefinite useful lives and intangible assets which have not been placed in service are tested for impairment on a cyclical (annual) basis.
Other intangible assets are tested for impairment only if there are indications of impairment. If any indications of impairment are identified and the carrying amount exceeds the estimated recoverable amount, then the carrying amount of such assets or cash-generating units to which such assets belong is written down to the recoverable amount. The Group recognised impairment losses on intangible assets in the statement of profit and loss, under costs by nature. This also applies to impairment losses on intangible assets not yet put into service or those resulting from the impairment of an entire CGU.
The amortisation period and the amortisation method for an intangible asset are reviewed at the end of each financial year. Changes identified during verification are accounted for as a change in an accounting estimates. Amortisation periods for intangible assets are as follows:
| Grupa rodzajowa | Average remaining amortisation period in years | Total amortisation periods applied in years |
|---|---|---|
| Patents and licences | 3 | 3-10 |
| Development costs | 1 | 3-15 |
| Other | 13 | 3-25 |
| As at December 31, 2019 | As at December 31, 2018 | |
|---|---|---|
| Development costs | 3 | 1 |
| Goodwill | 205 | 198 |
| Software | 195 | 150 |
| Other licences and patents | 32 | 39 |
| Acquired right of perpetual usufruct of land | – | 352 |
| Other intangible assets | 157 | 154 |
| Intangible assets not placed in service | 143 | 152 |
| NET CARRYING AMOUNT OF INTANGIBLE ASSETS | 735 | 1,046 |
Change in intangible assets
| Development costs | Goodwill | Software | Other licences and patents | Acquired RPUL | Other intangible assets | Intangible assets not placed in service | Total | |
|---|---|---|---|---|---|---|---|---|
| GROSS CARRYING AMOUNT | ||||||||
| AS AT JANUARY 1, 2019 | 19 | 198 | 682 | 143 | 366 | 244 | 160 | 1.812 |
| Capital expenditures | – | – | – | – | – | – | 140 | 140 |
| Settlement of intangible assets not placed in service | – | – | 118 | 13 | – | 14 | (145) | – |
| Sale, liquidation | – | – | (20) | (2) | – | (2) | – | (24) |
| Reclassification to ROUA | – | – | – | – | (366) | (14) | – | (380) |
| Purchase of new subsidiaries | 2 | 7 | – | 1 | – | – | – | 10 |
| Other | – | – | 16 | (5) | – | (7) | (2) | 2 |
| AS AT DECEMBER 31, 2019 | 21 | 205 | 796 | 150 | – | 235 | 153 | 1.560 |
| ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES | ||||||||
| AS AT JANUARY 1, 2019 | 18 | – | 532 | 104 | 14 | 90 | 8 | 766 |
| Amortisation, disposal | 1 | – | 75 | 17 | – | 10 | – | 103 |
| Impairment losses | – | – | – | 4 | – | (9) | 1 | (4) |
| Sale, liquidation | – | – | (20) | (2) | (2) | (24) | ||
| Reclassification to ROUA | – | – | – | – | (14) | (3) | – | (17) |
| Purchase of new subsidiaries | – | – | – | 1 | – | – | – | 1 |
| Other | (1) | – | 14 | (6) | – | (8) | 1 | – |
| AS AT DECEMBER 31, 2019 | 18 | – | 601 | 118 | – | 78 | 10 | 825 |
| NET CARRYING AMOUNT AS AT DECEMBER 31, 2019 | 3 | 205 | 195 | 32 | – | 157 | 143 | 735 |
| Development costs | Goodwill | Software | Other licences and patents | Acquired RPUL | Other intangible assets | Intangible assets not placed in service | Total | |
|---|---|---|---|---|---|---|---|---|
| GROSS CARRYING AMOUNT | ||||||||
| AS AT JANUARY 1, 2018 | 19 | 199 | 428 | 302 | 364 | 229 | 145 | 1,686 |
| Capital expenditures | – | – | – | – | – | – | 116 | 116 |
| Settlement of intangible assets not placed in service | – | – | 84 | 12 | 1 | 11 | (108) | – |
| Sale, liquidation | – | – | (3) | (1) | (4) | – | (1) | -9 |
| Reclassifications | – | – | 173 | (173) | – | – | – | – |
| Other | – | (1) | – | 3 | 5 | 4 | 8 | 19 |
| AS AT DECEMBER 31, 2018 | 19 | 198 | 682 | 143 | 366 | 244 | 160 | 1,812 |
| ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES | ||||||||
| AS AT JANUARY 1, 2018 | 17 | – | 379 | 161 | 11 | 78 | 8 | 654 |
| Amortisation, disposal | 1 | – | 79 | 19 | 8 | 12 | – | 119 |
| Impairment losses | – | – | – | – | – | – | 1 | 1 |
| Sale, liquidation | – | – | (3) | (1) | (4) | – | – | (8) |
| Reclassifications | – | – | 77 | (77) | – | – | – | – |
| Other | – | – | – | 2 | (1) | – | (1) | – |
| AS AT DECEMBER 31, 2018 | 18 | – | 532 | 104 | 14 | 90 | 8 | 766 |
| NET CARRYING AMOUNT AS AT DECEMBER 31, 2018 | 1 | 198 | 150 | 39 | 352 | 154 | 152 | 1,046 |
Intangible assets not placed in service
The presented amount of intangible assets not placed in service as at December 31, 2019 concerns mainly programs for implementation of IT systems in the Group and expenditures incurred on exploration and evaluation of deposits in the Złoczew field.
Available financial projections do not indicate any impairment of intangible assets not yet placed in service.
Goodwill
As at the reporting date of December 31, 2019, goodwill was allocated to the following segments:
