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## 2.4 ACCOUNTING POLICIES 

## Cost 

Intangible assets and property, plant and equipment are initially recognised at cost and subsequently measured at cost less accumulated amortisation, depreciation and impairment losses. 

Cost comprises the purchase price and any costs directly attributable to the acquisition until the date when the asset is available for use. The cost of self-constructed assets comprises direct and indirect costs of materials, components, sub-suppliers, wages and salaries, and capitalised borrowing costs on specific or general bor- rowing attributable to the construction of the asset. 

Research costs are recognised in the income state- ment as they are incurred. Development costs are recognised as intangible assets if the costs are expected to generate future economic benefits. 

For assets acquired in business combinations, includ- ing trademarks and property, plant and equipment, cost at initial recognition is determined by estimat- ing the fair value of the individual assets in the purchase price allocation. Goodwill is only acquired in business combinations and is measured by the purchase price allocation. Goodwill is not amortised. 

CO$_{2}$ emission rights are measured at cost at the date of allocation (i.e. normally DKK 0), while acquired rights are measured at cost. A liability is recognised (at fair value) only if actual emissions of CO$_{2}$ exceed allocated levels based on the holding of rights. 

The present value of estimated liabilities related to dismantling and removing the asset and restoring the site on which the asset is located is added to the cost of self-constructed assets if the liabilities are provided for. 

Where individual components of an item of prop- erty, plant and equipment have different useful lives, they are accounted for as separate items and are depreciated separately. 

The cost of assets held under finance leases is stated at the lower of fair value of the assets and the present value of the future minimum lease pay- ments. For the calculation of the net present value, the interest rate implicit in the lease or an approxi- mation thereof is used as the discount rate. 

Subsequent costs, e.g. in connection with replace- ment of components of property, plant and equip- ment, are recognised in the carrying amount of the asset if it is probable that the costs will result in future economic benefits for the Group. The replaced components are derecognised from the statement of financial position and recognised as an expense in the income statement. Costs incurred for ordinary repairs and maintenance are recognised in the income statement as incurred. 

## Useful life, amortisation and depreciation 

The useful life and the residual value are determined at the acquisition date and reassessed annually. If the residual value exceeds the carrying amount, depreciation is discontinued. 

Amortisation and depreciation are recognised on a straight-line basis over the expected useful life of the assets, taking into account any residual value. The expected useful life and residual value are de- termined based on past experience and expectations of the future use of assets. 

The basis of depreciation is calculated on the basis of the cost less the residual value and impairment losses. 

The expected useful life for the various items is as follows: 

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Amortisation and depreciation are recognised in the income statement under cost of sales, sales and distribution expenses, and administrative expenses to the extent that they are not included in the cost of self-constructed assets. 

## Impairment losses 

Impairment losses of a non-recurring nature are recognised in the income statement under special items. 

## Operating leases 

Operating lease payments are recognised in the income statement on a straight-line basis over the lease term. 

## Government grants and other funding 

Grants and funding received for the acquisition of assets and development projects are recognised in the statement of financial position as deferred income and charged to the same line item in the income statement as the depreciation of the assets for which the grants and funding were awarded. 

