## 5.1  SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) 

markets are expected to be profitable for a long period, the useful life of the trademark is determined to be indefinite. 

For each trademark or group of trademarks, measurement is based on the relief from royalty method under which the value is calculated based on expected future cash flows for the trademarks on the basis of key assumptions about expected useful life, roy- alty rate and growth rate and a theoretically calculated tax effect. A post-tax discount rate is used which reflects the risk-free inter- est rate with the addition of a risk premium associated with the particular trademark. The model and assumptions applied are consistent with those used in impairment testing and described in further detail in section 2.3.3. 

## CUSTOMER AGREEMENTS AND PORTFOLIOS 

In business combinations, the value of ac- quired customer agreements and customer portfolios is assessed based on the local market and trading conditions. The relation- ship between trademarks and customers is carefully considered so that trademarks and customer agreements are not both recognised on the basis of the same underlying cash flows. Usually there is a particularly close relationship between trademarks and sales. In these cases, no separate value for cus- 

tomer relations is recognised as the relations are closely associated with the value of the acquired trademarks. 

## FAIR VALUE OF PROPERTY, PLANT AND EQUIPMENT 

In business combinations, the fair value of land and buildings, and standard pro- duction and office equipment is based, as far as possible, on the fair value of assets of similar type and condition that may be bought and sold in the open market. 

Property, plant and equipment for which there is no reliable evidence of the fair value in the market (in particular breweries, including production equip- ment) are valued using the depreciated replacement cost method. 

This method is based on the replace- ment cost of a similar asset with similar functionality and capacity. The calculated replacement cost for each asset is then reduced to reflect functional and physical obsolescence. The expected synergies and the user-specific intentions for the expected use of assets are not included in the determination of the fair value. 

## 5.1 ACCOUNTING POLICIES 

For acquisitions of new subsidiaries, joint ventures and associates, the acquisition method is used. The acquired entities’ identifiable assets, liabilities and contingent liabilities are measured at fair value at the acquisition date. Identifiable intangible assets are rec- ognised if they are separable or arise from a contrac- tual right. Deferred tax on revaluations is recognised. 

The acquisition date is the date when the Carlsberg Group effectively obtains control of an acquired sub- sidiary, enters the management of a joint venture or obtains significant influence over an associate. 

The cost of a business combination comprises the fair value of the consideration agreed upon. When a business combination agreement provides for an ad- justment to the cost of the combination contingent on future events, the fair value of that adjustment is included in the cost of the combination. 

Goodwill and fair value adjustments in connection with the acquisition of a foreign entity with a func- tional currency other than the presentation currency used in the Carlsberg Group are treated as assets and liabilities belonging to the foreign entity and translated into the foreign entity’s functional currency at the exchange rate at the transaction date. 

If uncertainties regarding measurement of acquired identifiable assets, liabilities and contingent liabili- ties exist at the acquisition date, initial recognition will take place on the basis of preliminary fair values. If identifiable assets, liabilities and contin- gent liabilities are subsequently determined to have a different fair value at the acquisition date from that first assumed, goodwill is adjusted up until 12 months after the acquisition. The effect of the adjustments is recognised in the opening balance of equity and the comparative figures are restated accordingly. 

Changes in estimates of contingent purchase considerations, except in cases of material error, are recognised in the income statement under special items. Changes in estimates of contingent purchase considerations in business combinations completed no later than 31 December 2009 are recognised as an adjustment to goodwill. 

## Step acquisitions 

In a business combination achieved in stages (step acquisition), the shareholding held immediately be- fore the step acquisition is remeasured at fair value at the acquisition date. The resulting gain or loss is recognised in the income statement under special items. The total fair value of the shareholding held immediately after the step acquisition is estimated and recognised as the cost of the total sharehold- ing in the entity. 

## Non-controlling interests in a business combination 

In each business combination, management decides whether or not to recognise goodwill related to non- controlling interests. If such goodwill is recognised, it is estimated based on the fair value of the non- controlling interests less the non-controlling interests’ share of the fair value of acquired assets, liabilities and contingent liabilities. 

