(19) Other intangible assets

Accounting and measurement policies

Recognition and initial measurement of purchased intangible assets

In the course of in-licensing, the portion of the consideration paid by the Group to acquire intellectual property is recognized as an intangible asset. If development services are also acquired from the selling contract party, an appropriate portion of the consideration is recognized as deferred income and allocated to research and development costs in line with the service performance if capitalization is not possible.

Contingent consideration in the form of milestone payments in connection with the purchase of intangible assets arising outside a business combination is capitalized as an intangible asset and recognized as a financial liability once the milestone is reached.

Intangible assets acquired in the course of business combinations are recognized at fair value on the acquisition date. This also includes contingent considerations.

Recognition and initial measurement of internally generated intangible assets

Owing to the high risks until pharmaceutical products are approved, the criteria for the capitalization of development costs in accordance with IAS 38 are not met in the Healthcare business sector for the development of drug candidates. Costs incurred after regulatory approval are insignificant and are therefore not recognized as intangible assets. In the Life Science and Performance Materials business sectors, development expenses are capitalized as soon as the criteria have been met. This includes expenses that arose as part of registration for REACH. Furthermore, development expenses for internally developed software are capitalized provided that the relevant criteria have been fulfilled.

Subsequent measurement

In the course of subsequent measurement, the option to remeasure intangible assets at fair value is not exercised.

Intangible assets with a finite useful life are amortized using the straight-line method. The useful lives of customer relationships, brand names, and trademarks as well as marketing authorizations, acquired patents, licenses and similar rights, and software are between three and 24 years. In determining these useful lives, the Group considers factors including the typical product life cycles for each asset and publicly available information about the estimated useful lives of similar assets.

An impairment test is performed if there are indications of impairment. Indications of impairment and the need to reverse impairment losses are determined once a year and on an ad hoc basis with the involvement of the responsible departments and taking external and internal information into consideration. The Group examines the existence of indications of impairment using various factors, particularly deviations from forecasts and the analysis of changes in medium-term planning. In the event of impairment, an impairment loss is recorded under other operating expenses. Impairment losses are reversed to the amortized cost and presented in other operating income if the original reasons for impairment no longer apply. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment when a triggering event arises or at least once a year. Amortization does not begin until the product is ready for economic use and is recognized on a straight-line basis over the shorter of the patent or contract term and the estimated useful life.