An intangible asset shall be measured initially at acquisition or production cost and shall be presented in the statement of financial position in its net carrying amount, including grants.
Intangible assets with the finite useful life are amortised using straight-line method. Amortization shall begin when the asset is available for use i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Standard useful lives of intangible assets are from 2 to 10 for software and from 2 to 15 years for concessions, licenses, patents and similar.
The amortization method and useful life of intangible asset item are verified at least at the end of each year.
Goodwill acquired in a business combination from the acquisition date, shall be allocated to each of the acquirer’s cash-generating units (CGU), that is expected to benefit from the synergies of the combination.
After combination the acquirer shall measure goodwill in the amount recognised at the acquisition date less any accumulated impairment allowances.
A cash-generating unit to which goodwill has been allocated shall be tested for impairment annually, and whenever there is an indication that the unit may be impaired.
The main item of rights is CO2 emission rights, not amortised, tested for impairment.
Granted emission allowances are presented as intangible assets in correspondence with deferred income at fair value as at the date of registration. Purchased allowances are presented at purchase price.
For the estimated CO2 emission during the reporting period, a provision is created in costs of operating activity (taxes and charges).
Grants are recognised on a systematic basis in each reporting period to ensure proportionality with the relevant costs of the created reserve.
The Group recognises cost flows of CO2 emission allowances at weighted average method. Rights also include energy certificates, for which FIFO cost method (First In First Out) is used.
The Group verifies useful lives of intangible assets once at year end with effect from the beginning of next year. The impact of verification of useful lives in 2019 resulted in decrease of depreciation costs by PLN 13 million compared to depreciation costs that were recognised based on useful lives applied in 2018.
Change in internally generated intangible assets
As at 31 December 2019 and as at 31 December 2018 internally generated intangible assets amounted to PLN 112 million and PLN 101 million, respectively.
Change in other intangible assets
| Patents and licenses | Goodwill | Rights | Other | Total | |
|---|---|---|---|---|---|
| Net carrying amount at 01/01/2019 | |||||
| Gross carrying amount | 1,717 | 374 | 749 | 105 | 2,945 |
| Accumulated amortisation | (1,229) | (18) | – | (43) | (1,290) |
| Impairment allowances | (67) | (306) | (57) | – | (430) |
| Grants | (3) | – | – | – | (3) |
| 418 | 50 | 692 | 62 | 1,222 | |
| increases/(decreases), net | |||||
| Investment expenditures | 135 | – | – | 68 | 203 |
| Amortisation | (96) | – | – | (11) | (107) |
| Borrowing costs | – | – | – | 3 | 3 |
| Impairment allowances* | 8 | – | – | – | 8 |
| Grants | 1 | – | – | – | 1 |
| Foreign exchange differences | (1) | (1) | (1) | (2) | (5) |
| Other** | 40 | – | 121 | 2 | 163 |
| 505 | 49 | 812 | 122 | 1,488 | |
| Net carrying amount at 31/12/2019 | |||||
| Gross carrying amount | 1,899 | 373 | 869 | 172 | 3,313 |
| Accumulated amortisation | (1,333) | (18) | – | (50) | (1,401) |
| Impairment allowances | (59) | (306) | (57) | – | (422) |
| Grants | (2) | – | – | – | (2) |
| 505 | 49 | 812 | 122 | 1,488 | |
| Net carrying amount at 01/01/2018 | |||||
| Gross carrying amount | 1,602 | 374 | 746 | 113 | 2,835 |
| Accumulated amortisation | (1,112) | (19) | – | (38) | (1,169) |
| Impairment allowances | (104) | (306) | (58) | (5) | (473) |
| Grants | (3) | – | – | – | (3) |
| 383 | 49 | 688 | 70 | 1,190 | |
| increases/(decreases), net | |||||
| Investment expenditures | 10 | – | – | 39 | 49 |
| Amortisation | (83) | – | – | (2) | (85) |
| Borrowing costs | – | – | – | 1 | 1 |
| Net impairment allowances, incl.: * | 39 | – | 1 | 5 | 45 |
| Reversal | 29 | – | – | 2 | 31 |
| Foreign exchange differences | 7 | 1 | 1 | (1) | 8 |
| foreign exchange differences of impairment allowances | (2) | – | – | – | (2) |
| Other ** | 62 | – | 2 | (50) | 14 |
| Net carrying amount at 31/12/2018 | 418 | 50 | 692 | 62 | 1,222 |
The gross carrying amount of all fully amortised intangible assets still in use as at 31 December 2019 and as at 31 December 2018 amounted to PLN 594 million and PLN 582 million, respectively.