Accounts and notes Note 12 - Intangible non-current assets

Along with goodwill impairment testing, estimates are made of the recoverable amount based on the future cash flow that the asset is judged to be able to generate. Value of future cash flows significantly depends on the interest rate that is used in the calculations. Assumptions and assessments performed in conjunction with the 2007 impairment testing are described below.
Cash flow is forecast for the next five years, based on outcome for the segment in the current year. Since the operation's cash flows are forecast without accounting for financial items, the interest rate applied in the calculations of discounting cash flows must reflect the weighted capital cost for shareholders' equity and loan financing, i.e., the weighted average cost of capital (WACC). To determine the WACC, these factors must be estimated:
- Debt/equity ratio (financing mix)
- The required return on shareholders' equity
- Cost of long-term loan financing
The level of return required on shareholders' equity is normally based on the capital asset pricing model (CAPM); so required return is based on risk-free interest, with addition of a risk premium. The risk-free interest rate corresponds to that of a 10-year government bond, about 5% (4).
The risk premium comprises:
- General compensation for share-investment risks. This market risk premium was estimated to be about 4%, which is unchanged from last year.
- A weighting up or down for the investment's risk, relative to the market average. This factor was estimated to be about 1.25 (1.3).
- A supplement considering the segment's size and a supplement for specific risk conditions. In the segment's case (besides size-related supplement) this means, e.g., absence of a track record to support positive future financial trends and special dependent relationships (primarily customers and key people). Together, these supplements were estimated to about 1% (1 percentage point lower than previous years, based on the segment's performance last year).
The total interest rate for calculation purposes (median value in the above interval) before tax was based on the above factors and estimated to be:
5% + 1.25 x 4% + 1% = 11%
Considering the above information, there is no impairment loss.
GroupParent company
Goodwill2007200620072006
Opening acquisition cost130,139129,8414,930-
Through merger of subsidiaries---4,930
Through acquisition of subsidiaries141,921---
Year's purchases485,972760--
Translation differences12-462--
Closing accumulated acquisition costs758,044130,1394,9304,930
Opening amortisation---1,890-
Through merger of subsidiaries----1,397
Year's amortisation---493-493
Closing accumulated amortisation---2,383-1,890
Carrying amount758,044130,1392,5473,040




Goodwill by business division

20072006
Sweden

-111,081
International

-14,128
Other

-4,930
Total

-130,139
GroupParent company
Licence rights2007200620072006
Opening acquisition cost3,8043,2552,0811,655
Purchases775549670426
Closing accumulated acquisition costs4,5793,8042,7512,081
Opening amortisation-2,026-1,600-415-
Year's amortisation-531-426-500-415
Closing accumulated amortisation-2,557-2,026-915-415
Closing scheduled residual value2,0221,7781,8361,666
Group

Customer relationships20072006

Opening acquisition cost--

Through acquisition of subsidiaries56,060-

Sales--

Closing accumulated acquisition costs56,060-

Opening amortisation--

Year’s amortisation-3,737-

Closing accumulated amortisation-3,737-

Closing scheduled residual value52,323-

Group

Trademarks20072006

Opening acquisition cost4,0004,000

Closing accumulated acquisition costs4,0004,000

Opening amortisation-667-267

Year’s amortisation-400-400

Closing accumulated amortisation -1,067-667

Closing scheduled residual value2,9333,333

Group
Patents20072006

Opening acquisition cost1,2791,132

Through acquisition of subsidiaries1,234-

Purchases84147

Sales-75-

Translation differences106-

Closing accumulated acquisition costs2,6281,279

Opening amortisation-844-603

Through acquisition of subsidiaries-848-

Year’s amortisation-358-241

Sales41-

Translation differences-83-

Closing accumulated amortisation-2,092-844

Closing scheduled residual value536435

Note 1-16 Note 17-33
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